When you are totally engrossed in day-to-day operations, it’s easy to overlook some very important fundamentals – like budgeting. A budget helps you understand where your money is going and determine the income you’ll need to maintain operations. And, it’s vitally important to both short and long-range planning Here are some basic tips for new businesses or firms that have not yet developed a clear budget roadmap:
Don’t underestimate costs: Regardless of what your business does, sometimes things can go awry. Budgeting a cost cushion will give you room when they don’t go to plan.
Remember – time is money: One of the biggest mistakes small businesses make is not accurately estimating their actual time in budget plans. Treat your time like money and set longer deadlines as a hedge.
Pinpoint your sales cycle: Most businesses go through ups and downs during the year. A good budget can help you see the cashflow cycle, so you can keep costs lower during downtimes when your income is reduced.
Define and know your risks: Awareness of potential risks is important for all small businesses. Once you see and understand them, emergencies and other potential issues can be planned for and budgeted.
Keep employees informed: Your budget impacts every part of your business, so employees should be kept in the loop…especially when budget decisions might directly affect them.
Pay yourself properly: While it’s important to maintain backup finances, your budget should also give you ample room to adequately pay yourself. Remember, no matter how you look at it, you are an employee, too.
Review your budget: Budgets don’t remain static; revisiting yours regularly will help you make better financial decisions thanks to your increased understanding of cash flow patterns.
Because we were founded by an entrepreneur, First Internet Bank is constantly looking to provide the products and services that make managing your business a little easier. For example, Do More BusinessTM Checking accounts from First Internet Bank offer Cash Flow Analysis, financial tools that allow you to:
- Access key cash flow metrics 24/7
- Receive insights based on your current data
- Benchmark your performance against industry peers
- Effectively forecast revenue streams based on the impact of your financial decisions
And, when your budget tells you the time is right to take the next step, whether it’s funding for new equipment, business acquisition or facility expansion, First Internet Bank also offers Small Business Administration (SBA) 7(a) loans to get you rolling on the road to growth – and success.
