MONEY SAVING TIPS FOR SMALL BUSINESSES - Tip 1: Keep To A Budget

This first tip is probably the hardest thing for anyone to do, but the one most likely to save money in the long haul.

If you are like many small business owners, you are probably “winging it” when it comes to planning your expenses. You decide on a day-to-day basis what you are going to buy, and how much you are willing to spend.

That’s no way to run a business!!! If you don’t have a budget, you are being controlled by your expenses, not the other way around. If you want to control your expenses, and not be controlled by them, you simply must set up a budget and stick to it!

Your budget is your blueprint for the future. Next to sales, it is the key to profitability. If you make your sales numbers, it tells you whether you are going to make a profit. If you don’t make your sales numbers, it shows you where you need to cut back, and by how much.

Most importantly, it helps you maintain your cash balance. You’ve heard the expression “Cash is king”? Well, it’s true. If you run out of cash, you are done. How do you prevent that? You make your sales numbers, and you manage your expenses to a budget.

First of all, accept the idea that you are going to have to spend some time creating a budget. Schedule the time when you are going to do it. Suggestion: Schedule the first 2 hours of every day to work on it until you are finished. Start tomorrow morning.

Secondly, you need a tool to help you enter the numbers. A spreadsheet, such as Microsoft Excel, is the software of choice for most small businesses. Most spreadsheet software comes with budget templates for small businesses right in the box, or you can download them from the Internet.

Thirdly, you’ll have to do some research. You have to figure out in advance what you are going to spend money on. You weren’t born with that knowledge, right? How often do you use the phone? What is a reasonable expense for the use of it? What about rent? Cost of goods? Insurance? Professional services? Payroll?

Once you have your expense categories entered, and estimates for your monthly expense, you now know, perhaps for the first time, how much income you need to make to run your business. If you don’t think you can make that sales target, think about cutting back your expenses.

Finally, the hardest job of all: stick to your budget! Sure, you will have to adjust your budget as time goes by, as prices change, or as you find out about new expenses. But make those adjustments, reset your sales target, and try as best you can to stick to the budget!

What does this mean? It means this: if one month you find that you have to spend more for courier services than you budgeted, then deliver the package yourself! Or spend the extra money, but spend less on some other line item in your budget.

Stick to your budget, make your sales numbers, and you will have a successful business. Happy budgeting!

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