When building a business, there are many things you must take care of – marketing, prospecting, building a website and establishing your brand presence.
While these are certainly important considerations, your business budget is the one element you must get right from the beginning. But how, exactly, do you create a sound budgeting plan or enhance your existing one? Well, here are seven budgeting tips to help you get started.
1. Invest in a new budgeting tool
Even though Excel is a free and highly customisable budgeting tool, it is also time-consuming and limited in functionality. Especially if your team has to juggle a variety of tasks or has many departments.
Thus, it’s best to invest in a reliable budgeting tool and make budgeting easier for yourself.
2. Try out a new budgeting method
There’s a bit of hit and trial involved in budgeting, especially if you have a small business. You can try a variety of budgeting methods before settling for the one most suitable for you. Here are some options:
- Value proposition budgeting: You can assign budgets for different departments based on the returns they provide
- Activity-based budgeting: You can assign a budget for every task or activity
3. Have a Plan B
Having an optimistic outlook can help while running a business. But you have to be a realist as well. Not all your budget plans might work out. That’s why it’s essential to have a plan B or even a plan C ready for different market scenarios.
Additional Read: Budget 2021: Key Highlights and Takeaways
4. Adjust your budget
In the early phases, you might have crafted your budget to maximise the profits or simply to break even. But as your business evolves, so should your budget plan.
While planning, you should align your budget with the business strategy you have devised for the next quarter or year. Whether it’s growth, expansion, or savings —make sure your budget clearly reflects what you hope to achieve.
If times are tight and expenses are piling up, cost-cutting can help you clear out some budget. To begin with, try to reduce your fixed costs since they are easier to predict and prepare for. But for variable expenses like operational expenses and taxes, it’s best to record all your monthly payments. Then, earmark the areas where you can reduce your spending.
6. Shop around for new suppliers or service providers
If you’re unable to bring down your fixed costs, don’t be afraid to let go of your current suppliers. Instead, shop around for new vendors that offer cost-effective products and services. Doing so can help you find breathing and expansion room for your budget.
7. Use business finance
Even with all the careful planning, you can still end up with unexpected expenses, seasonal slumps, or late payments. In such circumstances, a business loan can come to your rescue.
With business finance, you’ll have sufficient cash flow to get things running smoothly. Also, the market is filled with lenders offering business finance at affordable business loan interest rates. So, getting a loan won’t be a problem.
Additional Read: Tax Benefits on Business Loan
Struggling to fit everything into your budget? Well, you may need a loan. If that’s the case, Tata Capital has the right one for you. With our fast application procedures, easy-to-meet business loan eligibility, and affordable interest rates, you will have the capital you need in a jiffy.
Start planning your loan today with our business loan EMI calculator.