As both a start-up business and a global one, everyone must budget at some point to maximise their profits. If you are not budgeting or it just doesn t seem to be working, having the helping hand of an accountant could improve your situation, ensuring you only spend money that will help your business. Read our blog and discover how your business can budget effectively.
There are several steps you must take to set up a budget and then stay within this budget whilst managing your business successfully. Roger Hatherall & Co will offer expert advice in these situations to help businesses of all sizes to work.
Creating A Budget
The first step before you can use your budget is to actually create one! To do this, you should gather all your expenses and revenue information that has built up over the last few months this should give you an accurate representation of how much you usually spend.
Of course, when you set up a budget, the target is to reduce costs; by looking at your expenses you should see where you have spent and wasted money on possibly irrelevant products. The main costs that you should worry about is:
Anything else should probably be cut out of the picture for the time being, unless you have other specific payments that you need to make. By bringing the budget down from previous months, you will have already saved yourself money for the months ahead basing your budget on these costs.
Set Your Targets
Once you ve set your budget, it gives you a lot of flexibility for your business and gives you great opportunities to plan for the future. Each department of your business, even if there is only one, will know exactly how much money they have to spend and how much money they have to make to generate a positive profit.
Each month you can set goals for each staff member as well as long-term goals based on how much money you will be spending monthly. As you have based your budget on the last few months of spending and income, this will help you forecast the next few months of your income as well and you should try to create revenue that is double your total costs, to create a healthy profit margin.
The reason budgeting can go wrong is because you are prioritising the wrong items when it comes to making payments. Although you may require assistance from professional accountants, it can help significantly when it comes to investing your money in the products and services that will actually help your business.
You should always be investing back into the business to make it even better, otherwise your business will fail to expand the way you want it to. Whether you employ new staff or move into selling new products, you should always consider what is most important for your business to splash the cash on.
Reward Your Staff
Your staff are a big part of your business and without them you might not be able to make your company work. Although you should be careful about spending too much money until it hurts your business, rewarding your staff with bonuses and commission can be very productive.
This should motivate your staff to work harder and perform better which will result in more money for your business and so the cycle goes around. With the help of budgeting, this can all be possible and as long as you invest in the right areas, this is an easy step for your business to take.