Budgeting is vital for small businesses. A well-planned budget allows you to control costs and make informed decisions. Here's a guide to help you plan better and increase profits.
1. Understand Your Costs:
Fixed Costs: Rent, salaries, insurance
Variable Costs: Raw materials, utilities, advertising - this can vary dramatically week over week so looking at it by period is best practice
Unexpected Costs: Always set aside funds for unforeseen expenses. Anything from large repairs to weather can throw unexpected wrenches in your profitability and planning
2. Set Realistic Goals:
Short-Term Goals: Weekly or monthly targets
Long-Term Goals: Quarterly or yearly targets
Align Goals: Ensure your goals align with your business strategy
3. Create a Budget:
Revenue Estimates: Calculate potential earnings
Expense Tracking: Monitor what you spend - start with your accounting system P&L
Profit Calculation: Subtract expenses from revenue
4. Monitor and Adjust:
Regular Review: Check your budget frequently and see how it compares to what you ACTUALLY spent - running this variance is critical for future improvements
Adjust as Needed: Make changes to stay on track. Can't stress enough how important this is!
Use Tools: Consider tools like Starfish to better understand and lower costs
5. Save and Invest:
Build a Reserve: Save for emergencies
Invest in Growth: Reinvest profits to grow your business
Budgeting doesn't have to be complex. By understanding your costs, setting realistic goals, creating and monitoring a budget, and saving wisely, you can better plan and thrive in today's competitive marketplace.
For personalized insights and tools tailored to your business's specific needs, visit Starfish. We're here to help you increase your profit and make more actual money.
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