How To Practice Small Business Budgeting That Prepares For The Unexpected
A dollar saved is a dollar earned as they say. For small businesses perhaps that saying should be transformed into "A dollar budgeted for is a dollar earned". The process of budgeting is not the most exciting aspect of running a small business, but it is a vital process by which a business survives. Preparing for the unexpected in particular is a sign of a smart business leader.
Estimates That Are Far From Reality
It is all too easy for many of us to incorrectly estimate either how much money our business will bring in, or how much we are going to spend. Many fall into the habit of preparing for the best case scenario and daydreaming of a reality full of profits when in reality it is better to prepare for the worst that could happen.
If estimates fall too far out of line, it is entirely possible to mess up the budget for the foreseeable future, and no one wants to go down that path.
Paying Bills Late
Individuals frequently pay bills late when they are strapped for cash and have to make decisions between what is getting paid and what isn't. Businesses too fall into this trap from time to time and must decide what their priorities are. Unfortunately, they will also have to be prepared to pay late fees on those bills just as individuals do. See what suncorpbank.com.au says about it,
Even the smallest of businesses have bills to pay, and not paying them on time is going to cost you, even if you think you've budgeted for it. It's better to ensure that you stay on top of your regular outgoings.
Businesses that deal in international trade (including online businesses) need to consider currency rates. When currencies rates get too far out of line it can put a damper on business profitability rates. This in turn can also make a mess of even a perfectly laid out budget. It is best to prepare for the reality that currency rates change all the time, and to leave some margin of error in the budget for these changes. If the rates happen to fall in your favor then great, but if they don't you want to be prepared for that as well.
Contact us for more information regarding prudent budgeting practices to have as a small business.