Your Business Budget: 5 Tips For Staying In The Black
For new entrepreneurs, the business budget is perhaps the most delicate balancing act a company has. Money is allotted for payroll, supplies, financial obligations (bills), marketing, and other expenses. On the other side of the scale, sales must generate enough revenue to meet and exceed those expenditures. If the balance on the business budget is off, a strain can be placed on cash flow, and operations can grind to a halt. To help you, we have put together five tips any company can use to keep their business budget healthy.
1. Keep Business And Personal Expenses Separate
This may sound like a no-brainer, but a business budget for a startup or small organization can fall into this trap very easily. Because finances are usually a bit more streamlined in smaller organizations, buying coffee for the office, or taking a potential client to lunch may be a temptation. Sometimes rolling a personal computer into an office equipment purchase does not seem like it would have a big impact on the business budget. All of these little purchases add up, and can eat into finances which were initially designated as working capital to provide flexibility when unexpected necessities arise.
2. Don’t Be Afraid Of Taking On Large Orders
It may seem counter-intuitive, but taking on large customer orders can actually improve your business budget. Instead of placing a strain on cash flow by dedicating resources to large orders (and sacrificing smaller ones), entrepreneurs use purchase order financing. Purchase order financing is an advance in capital to cover the cost of filling large customer orders. Once the order is filled, the customer pays and the financing is deducted from the amount owed on the invoice. This allows smaller companies to rack up growth capital quickly and increase the spending limit on their business budget.
3. There Is No Such Thing As “Just A Little Over Budget”
You have a business budget, and you need to stick to it. You literally cannot afford to move the goal posts if something falls outside of the money you have allotted for various departments or operations. If the business cannot afford something, then it needs to be placed on hold until the next quarter, or after a heavy sales period. Making allowances when they are not in the business budget will come back to haunt you later on.
4. Get Rid Of Existing Debt To Improve Your Business Budget
This is much easier said than done, especially is there are existing bank loans making you adhere to a drawn out payment schedule. Getting rid of debt will free up working capital which would otherwise go to creditors. Some businesses make a concerted effort to restructure debt to lower payments and interest to be able to configure a better business budget.
5. Seek Alternative Financing
Sometimes business opportunities arise that can increase productivity and earnings in the long run, but will severely impact the business budget if action is taken. Instead of jeopardizing your cash flow, or regretting putting things off, there are alternative solutions. Commercial financing programs exist to provide the necessary financing to take advantage of business opportunities without decimating your budget. Many of these financing programs are flexible, can be arranged quickly, and do not place any debt on the balance sheets, or stress on existing finances.
To learn more about budget-friendly financing alternatives, contact Vantage Commercial Capital at 913-543-4242. We will give you a no-obligation analysis of your business budget to provide the right financing solution to help you reach your goals.