We recently offered some advice on how to get started with budgeting. But effective budget management isn’t a one-and-done deal. Here are five tasks you should be doing on a regular basis to help ensure you get the most out of every dollar.
Audit Your Budget
Once it’s created, many people only consult their budget when they want to make an unscheduled purchase or when they’ve run into a financial problem. Instead, look over your financial plan at regular intervals: at least monthly and any time you have a significant change in costs or revenue.
A budget lets you compare actual expenses and revenue with your earlier projections, which is crucial for assessing the effectiveness of your financial strategy. By doing this once a month instead of once a year, you can detect trends as they develop and catch small problems before they become dangerous.
Involve the Staff
If you work with an accountant or manager, they are likely already involved in budget planning. But you may want to consider widening that circle. Even minor budget changes can have a big impact, particularly in companies with a small staff. Increasing your financial transparency helps employees feel more secure, since they can prepare for these changes ahead of time. This also brings fresh perspectives to your financial strategy, making it more robust overall.
When it comes time to implement that strategy, you and your staff are already on the same page, which means you hit your targets faster.
Keep an Eye on the Industry
While every budget is unique, it’s a good idea to look into the average budget for businesses of your size, in your industry. Comparing your numbers with these trends can provide valuable insights on how efficiently you are operating, for example, or how much funding you need to hit your next growth objective.
Create Financial Contingency Plans
Take some time to consider what options you’d have if you were faced with a sudden budget emergency. While you can’t anticipate every possibility, try to identify a few likely scenarios and outline strategies for handling them.
Contingency plans keep your finances, and your company, ready to roll with the punches. If you lost a few clients, for example, how would you make up the shortfall? Would you have to cut expenses or rely on credit lines until the client base expands? If a crucial piece of equipment broke down, do you have enough savings to replace it before operations are delayed?
Taking time to answer those kinds of questions now can sometimes make the difference between a bump in the road and total disaster.
Outsource Accounting and Bookkeeping
As a business owner, you should always be aware of the state of your financial health. But if financial tasks are interfering with your ability to pursue your vision, outsourcing them to an expert financial services team can be an ideal solution. This is especially helpful if you don’t have or can’t afford a full time employee to manage your finances.
At Watermark Ventures, we can help you with every aspect of your finances, from everyday bookkeeping to overall strategy. In addition, we ensure compliance with all relevant regulations, while making payroll a breeze.
As you can see, you don’t need to be a financial planning expert to keep your business budget in good shape. Whether you are on your own or with a financial team, regularly investing a little time and effort into budgeting ensures you have a stable base on which to grow now and in the future.
