How to properly review your business budget
With your thoroughly devised business budget, you have a firm, workable financial path to success, and a reliable plan. However, what most business owners don’t realise is how flexible your budget needs to be, and that your approach to your finances needs continual fluidity to survive. Reviewing your budget is essential; here is how to properly analyse your business budget for growth, and how to rework your financial aims as your business grows and develops.
Employ regular, thorough analysis
To understand where your budget is at, and how you are progressing against your predicted spending, you need to record your expenses and sales continually. As this is basic bookkeeping, most business owners shouldn’t find this an issue. However, regularly, business owners should review the actual finances against the budget, analysing what was successful, what areas were off the mark, and gaps that haven’t been addressed. Monitoring your budget should happen as regularly as possible, as it can become easy to fall behind or overspend in certain areas quickly.
It’s unreasonable to think your budget won’t have any discrepancies. More than often, a business finds themselves spending more on specific areas of the business, and can’t account for the reasons why. Especially as the business grows and parts of the budget are allocated to key decision-makers, the budget needs to be reconciled for every part of your spending to keep each person accountable.
Budget for new goals
What you want to achieve in your business won’t remain the same as day one, and your budget needs to account for this. Your initial financial goals will usually address your start-up requirements, such as technology, equipment and bulk marketing material. As you become more established, you need to make room in your budget for new product lines, staff demands, location expansion and improved equipment.
Move your budget around
While you may not have additional cash flow and profits to top up your budget, you may need to rework certain areas to favour more high-valued items. When we initially budget, we make educated guesses on what we will likely need in each area of the business, with provisions for marketing, staffing and equipment, for example. As the business evolves, our budget does too, to include areas that need more considerable attention and remove items that aren’t applicable, or that aren’t providing the business with a valuable return.