Every business owner knows that establishing a budget is essential to the success of a company. Without knowing how much money you are spending, saving, or borrowing, it’s difficult to plan for the future of your business. Follow these tips to better manage expenses on a small business budget.
Estimate and match expenses to revenue
When it comes to running a small business, it’s important to estimate expenses and match expected costs to real or anticipated revenue. This basic principle of accounting helps business owners evaluate their financial health and develop goals for the future. Start by creating a budget that lists both monthly expenses and revenue.
Trim unnecessary expenses
Once you’ve established a budget, it’s a good idea to review your budget periodically to identify expenses to trim or eliminate. For example, consider working remotely instead of renting office space, or outsource projects such assembly, packaging, or fulfillment services to save on overhead expenses.
Establish an emergency fund
Finally, it’s important to plan for unanticipated or emergency expenses for your small business. Ensure your small business is prepared for the unexpected by establishing an emergency fund using cash reserves. Just like a personal emergency fund, businesses should set aside at least three month’s worth of expenses for emergencies in an easy-to-access savings account. With a substantial emergency fund, you can have better peace of mind no matter what the future holds.
If you’re looking for better ways to manage or cut back on expenses, consider utilizing outsourcing for assembly, packaging, or fulfillment services to reduce your company’s overhead. Ohio Valley Goodwill Industries has flexible outsourcing solutions to match your unique needs and stay within your budget. Contact us today to learn more and arrange a complimentary tour of our facilities in Cincinnati.