4 Best Budgeting Tips for Small Business Owners

If you’re a small business owner, you already know that mastering the art of budgeting isn’t easy. There are always a million things you’d rather do than sit down and confront the reality of your finances. But the longer you keep your eyes off your money, the bigger your problems can become. If you aren’t careful, this type of anxious-avoidant behavior can seriously hold you back, keeping you from your goals both in the short and long term.
Regardless of whether your business is established or brand new, chances are that balancing the books is an important but unwelcome necessity. When you’re making ends meet using credit cards or a small business loan, you need a way to make informed, purposeful decisions about where to best allocate your funds. Staying out of debt and running a successful business involves making difficult choices, and love it or hate it, you are going to need to find a way to establish a budget that works for you.
Fortunately, there are ways to make the process easier, and there are other small business owners willing to share their success story secrets. We reached out to some of them to ask what budgeting tips they’d like to share with others.

1. Weigh and Monetize Your Tasks

When it comes to budgeting, applying it to your time is just as important as applying it to your money.
Time-strapped Jessica Limeberry, mother of four small children and owner of a bridal, tux and prom boutique, said she needed to learn how to evaluate convenience with cost, and weigh whether hiring someone to do the tedious, non-lucrative tasks was a smarter way to go about business.
“Will that time spent on marketing bring in more money than the $15/hour I paid my employee?” she asked. “Is it worth my time and effort to spend that hour out on the floor selling (I own a bridal boutique) or would my talents be better used somewhere else? These are questions I ask myself with each new project or task, evaluate, then get out there and make it happen.”

2. Build a Line of Credit

Even if you never tap it, having a line of credit at the ready can be very helpful when running a small business.
“Try to get a line of credit or talk to your bank about short-term loans so you know you have the resources in place to get you through short-term cash flow issues when they arise,” Bill Bellows, executive in residence of the Department of Management at American University’s Kogod School of Business said.
If your credit isn’t all that great and you don’t think you’ll qualify for a line of credit, there’s no better time than the present to start turning that around. Secured credit cards can be an easy way to start building your credit history and improving your credit scores

3. Establish a Business Savings Account

“As a small business owner, the top way I’ve mastered the art of small business budgeting is to put 10-20% of each sale into a business savings account,” said Isha Edwards, a Brand Marketing Consultant and business instructor. “Similar to personal finance, you never know when you’ll have a rainy day or how long the storm will last! Also, pay off debts in full (preferably within 30 days) or at least by fiscal year end.”

4. Know Your Costs

“In any business, there are fixed, variable, and unplanned expenses,” Marc Johnston-Roche, co-founder of Annuities HQ, said. “If you don’t know your costs and have a strategy to absorb variable and unplanned expenses, then you will, eventually, stress yourself out — being reactive versus proactive in your business.” It also helps to overplan your yearly expenses by adding 10-20% as an overage to “overcome any curveballs,” he said.
If you never plan, you can’t win. With a solid budget, you can use your money AND your time more wisely, track your expenses and your spending, and, most importantly, control your money so that it doesn’t control you. By re-thinking what your budget can do for you, you’ll be able to see it as less of a roadblock and more of a fast-track to financial security and future success.


Christine Giordano

Editor & Reporter at Credit.com
Christine Giordano is an editor and reporter for Credit.com who covers a variety of personal finance topics. Prior to joining us, Christine wrote for The New York Times, U.S. News & World Report, Harper’s Bazaar, Newsday and many other publications. A former staff writer for the New York Times Company, she is an award-winning journalist.

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