In the course of running a business, a lot of costs will crop up, and many needs will have to be taken care of. Having a hard budget to stick to can create a lot of stress, forcing you to buy cheaper products or cut costs in inefficient ways. This list will help you come up with some effective strategies for working within your budget, without sacrificing the well-being of yourself, your office or your employees.
1. Find New Ways To Finance
An interesting way to bypass the struggles of a strict budget is by using invoice factoring companies. If you're selling business to business or business to government, this is a great option for you to make the most of your invoices and get access to more cash flow for day to day expenses. By pairing with a factoring company, you'll take the invoices from a sale and sell that invoice to the factoring company.
Then, you'll receive an advance payment from the factoring company, along with the rest of the fee once the original debt has been paid off. If you're a company that could benefit from getting cash now from more lengthy transactions, this may be just what you need. This is a great option for business such as construction, staffing, and transportation, and for businesses unable to access bank financing for one reason or another.
2. Avoid Underpaying Yourself
It can be tempting, if you own a company, to use every last penny to provide for the business's needs by paying yourself little to nothing. It's important to remember that you're an employee as much as anyone else, and scraping by on an insufficient wage will only create resentment and cause you to burn out more quickly. You'll tell yourself it'll only last until there's more revenue or until a loan has been approved, but sooner or later you'll realize that a temporary fix has become long lasting. Find other ways to get the money needed for a budget and don't underpay yourself to get where you need to go.
3. Expect More Costs
When setting a budget, you may have the most accurate spreadsheets and calculations possible, but it's important to remember that there will always be unforeseen expenses. Set a budget higher than what you may think is necessary to avoid a lot of stress down the road. Without a buffer, it'll be impossible for your business to take risks without the possibility of catastrophe, and you'll be setting yourself up for failure. Nobody can see into the future, and running into monetary obstacles during a project will slow down your company's progress and maybe even sink the whole ship.
4. Treat Time Like Money
It may sound cliche, but time truly is money, especially when running a business. Including time management into your budget is essential to its long term success. Just like with a monetary budget, a time budget should include more than you think is absolutely necessary for project completion. If it's completed early, you'll have saved yourself money, and if not, you'll be glad you gave yourself longer.
Plus, in a business where employees are paid hourly, it's important they're able to make the most of the time they are paid for. Projecting time frames inaccurately will result in inefficient work, so your hourly workers will not have much to show for their paycheck. Using a Gantt chart or other project management tools can be incredibly helpful for setting expectations, and helps to visualize and simplify the process.
5. Create a Budgeting Team
It stands to reason that if your employees are expected to stick to the budget, they should be involved in its creation. Unless you're choosing to do all the decision making and spending on your own, creating a budgeting team is an essential part of having a realistic and functional budget for your specific company needs.
Try to choose members from diverse areas of the company, to create a team that has a well-rounded concept of how the company functions. After all, if you only have a team made up of employees from accounting, they'll most likely only want to solve problems for accounting. Be open to new, creative ideas, and encourage the team to think outside of the box when solving budgeting problems.
Spending can easily get out of control, and you may find yourself exceeding the budget in spite of your best efforts at frugality. Use these tips to set a budget that works for your company, and remember that the most important part of the budget is to keep your life and your business running smoothly, with as little stress as possible.