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Budgeting Tips for the Small-Business Owner

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Budgeting Tips for the Small-Business Owner

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By Christine Vogt
Senior Editor, MindEdge Learning

Businesses come in all shapes and sizes—and so do budgets. Regardless of budget size, all businesses experience fluctuations in their finances. Therefore, budgeting is one of the most important aspects of running a successful business. This is especially true for small-business owners.

A budget is a roadmap that identifies where the money is coming from or where it is going. It is the framework that allows a small-business owner continually to track where their business is financially at any given point in time. Having this knowledge is the key component to being able to strategize and develop both short-term and long-term business goals.

A good budget allows a business owner to analyze whether or not their business is in a position to expand or invest in new opportunities. At the same time, budgets can also serve to alert a business owner if they are at risk of not being able to meet their operating costs.

Here are five budgeting tips for small-business owners, to help them make better budgets:

1. Keep it Simple:  Don’t feel the need to get too granular. Organize your budget into broad categories such as utilities rather than electricity, water, and heating oil.
 
2. Overestimate Expenses: Budget your costs to be slightly higher than what you anticipate. This will allow for a cushion should unexpected delays or problems arise.
 
3. Monitor your budget: Revisit your budget from time to time. Remember, your budget will constantly be evolving as your business changes and evolves with the market environment. Reviewing your budget regularly will provide better control over financial decisions, guiding you as to what you are projected to make versus how much you can afford to spend.
 
4. Time is money: Remember that time is money, especially when you have people working for you who are paid for their time. Underestimating time increases costs. Be sure to account for the time when developing your budget. Setting external deadlines slightly later than what you anticipate is a good practice.
 
5. Savings is key: Always save a portion of your profits. A general guideline is to accumulate enough savings to cover three months of expenses.

For a complete listing of MindEdge’s course offerings on small business management, click here.

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