3 Steps to Building a Business Budget That Works

A gym membership to improve your health, a coffee pot to save you money by brewing at home instead of daily trips to Starbucks, or an eco-friendly car that’ll carry you where you need to go and be good to the environment.
 
These are all expenses that reflect your personal goals and priorities.
 
But does your small business spending reflect your business goals and priorities?
 
And if not, what can you do to create and balance a business budget that ensures you’re getting the best return on investment for the money you put into your small business?
 
 

3 Steps to Building a Business Budget That Works

 
1. Know Where Your Money Goes
Before you can make adjustments to your business spending (and thus your business priorities) you need to know where your money is going.
 
Plug your business finances into an online tool like Outright (we now use Quickbooks for Small Business). Quickbooks requires minimal to no data entry and will give you a visual pie graph of your spending by vendor or by category so you can make determinations at a glance.
[SAVE 50% NOW USING OUR PARTNER LINK, Outright (we now use Quickbooks for Small Business)].
For example, does the office supplies chunk of your spending pie look suspiciously large? It might be time to reevaluate whether you need all those paperclips.
 
 
Many banks also offer handy apps so you can access your financial information from your mobile phone or tablet. But even if your bank is a little behind technologically, you can sync your finances with an app like Mint for a snapshot of your finances at a glance.
 
 
 
2. Maximize the Money Coming In
Your second step to getting your spending priorities in order is to ensure that you are actually collecting all the money you are owed. For the less administratively inclined small business owner, simply keeping up with the money coming in  (or not coming in) can be a real headache.
 
It’s easy to lose track of an invoice you sent out by mail or email. Use a time tracking and invoice management tool like Chrometa to keep up with the time you spend working for clients so you can send accurate invoices. With these tools, you can even see at a glance how much money you have outstanding.
 
And be sure to accept payments the way your customers want to pay: electronically, preferably via credit card. Not only is paying with credit more convenient for your customers, but you also then have record of the payment and the funds hit your bank faster, too.
 
Check out WePay to invoice and accept payments all in one place. They even have a widget you can embed in your website to allow customers to pay instantly with their credit cards – no sign up required.
 
 
 
3. Examine Your Spending… With a Sharp Knife
I don’t mean literally examine your bank statement with a cutting implement, but be ready to make cuts… and even to plump up spending in some areas.
 
Ask yourself:

  1. Am I spending money in areas that will give me a return on my investment? – Money spent on behind the scenes purchases like cute office supplies and decorations for the home office that no client ever visits could often be better spent elsewhere. Try re-allocating some of those funds to buying advertising or attending networking events with your potential clients.
  2.  

  3. Am I paying too much for something that should be free (or very cheap)?OpenOffice is a free and open source version of the Microsoft Office Suite. Gimp is a robust yet free photo editor that performs many of the functions that small businesses need. WePay can virtually take the place of an expensive merchant account and terminal rental. The bottom line is that with today’s technology many companies are finding a better, cheaper ways to offer business services. Be sure you aren’t paying for something that your competitors are getting for free!
  4.  

  5. Where do I need to spend more money?– As crazy as it might sound to the bootstrapping small business owner who’s always watched every penny like a hawk, it may be time to spend more. For example, perhaps buying in bulk could give you the price break you need to make the products you sell on eBay more profitable. Or maybe hiring a contractor to take are of some of your day-to-day tasks could free you up to win more clients. After you’ve cut your spending elsewhere, determine if there’s an expenditure out there that could help your business succeed.

 
As a small business owner, you have the freedom to change quickly with the times. Following a budget and knowing how you’re spending can mean the difference between soaring ahead of the competition or sinking.

Do you follow a small business budget? How do you keep it in check?

 
 
 
I am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Visit Visa’s reinvented Facebook Page: Well Sourced by Visa Business. The page offers small business owners a place where they can find educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently. Every month, the page introduces a new theme that focuses on a topic important to a small business owner’s success. For additional tips and advice, and information about Visa’s small business solutions, follow @VisaSmallBiz and visit http://visa.com/business. 
 
 

Follow

Heather Allard

Heather Allard is a mom of three kids + one big rescue dog. She's a wellness buff, an essential oil educator with dōTERRA, and a self-professed “entrepreneur to the core”.
Follow

Latest posts by Heather Allard (see all)

Previous

Next

3 Comments

  1. Amyli McDaniel of ParentEntrepreneurs

    Great post. Because my ultimate goal has always been to generate revenue in my business but never at the expense of any major sacrifice of time away from my family, I am very strict about using a working budget month in and month out as the foundation for spending decisions in both home and business.

    The great thing is that once you have a budget, you have CLARITY on what you can and cannot spend for certain things. With clarity, you will be more productive and you will make smarter decisions laser focused on the goals that are being driven by your budget plan.

    When it comes to business growth, I like item #3 in the post because I often find that I do not automatically choose to spend money on activities that will grow revenue or be effective in building my brand or community. However, these are the key drivers to any business. It gets too easy to avoid those goals and get trapped in spending too much in other areas. By having a budget, I know I can only spend x amount on other areas and that I need to devote time to figuring out how to best spend the money allocate to business and revenue growth.

    Thanks for the helpful post!

    Amyli McDaniel

    Reply
  2. Dali

    Thank you for the great tips and links. You are right about telling boots trappers to spend more, it sounds crazy but I think sometimes we are so afraid of spending money on (accidentally on the wrong thig) that we be one afraid and miss out on opportunities to grow our business.

    Reply
  3. Prerna @ The Mom Writes

    LOVE this and yes, we have a small business budget that my husband and accounts-in-charge watches like a hawk..LOL.. Seriously, I agree with you about spending money wisely.. For instance, we have a home office and work 100% virtually so seriously NO client is ever gonna visit us anytime soon.. This year, we’d planned on still redecorating our home office and spiffing it up to make it a nicer workspace BUT then, B-School came along and guess where we invested the redecorating budget and then some:-) So, yes, it is possible to invest without having to take out a loan or go into debt!

    Reply

Leave a Reply to Prerna @ The Mom Writes Cancel reply

Your email address will not be published. Required fields are marked *

Pin It on Pinterest