As a small business owner, it’s never been more important to watch your cash flow. Unfortunately, it’s not uncommon to spend faster than money comes in. And when you miscalculate the actual running costs, financial trouble can quickly follow.
Budgeting for expenses—both the expected and the sneaky, unexpected ones – is essential. Here are a few tips to get you started.
Small business equipment
It’s not just the purchase of computers, IT services, and machinery that need to be considered, it’s the ongoing maintenance and upgrades that ensure you are up to date with technology. The hidden expenses here are what can impact productivity; using slow equipment or having to continually repair old tools can very quickly eat into your profits.
Networking memberships and licenses
Depending on the industry that you are in, there may be plenty of opportunities to join community events, or legal requirements to obtain permits and licenses to operate. Exposure for new business and networking can come at a cost, but the thing to look out for is paying for services you no longer need, long after an event has concluded. Too often businesses forget to cancel ongoing membership costs. Or due to a shift in business focus, old group connections no longer generate leads or provide the value they once did.
When the time comes to expand and hire your first employee, the time, effort and training you put into upskilling staff can all be lost when they move on. Not only do you need to recruit wisely, but it’s important to spend quality time focusing on staff retention.
Whilst staff turnover is a natural progression in any industry, unexpected costs due to loss of productivity can be challenging, especially when you are just starting out. Consider programs that create a positive culture which can lead to happier and more engaged staff.
Don’t try to be a master of everything – using the services of professionals can help you be more efficient on the job. If you aren’t really into bookkeeping and know it will take too much time learning a new accounting system, one positive take on spending where you cannot add value is to outsource. The more time you have to generate income doing what you do best, the better.
Budgeting is not always easy. However, by starting with a month to month focus, you’ll be able to keep ahead of any unexpected expenses. This is a more stable place to plan for the next phase which may include expansion and hiring of more staff.
If you are seeking guidance to prepare a roadmap assisting you to run a small business, manage cash flow, and learn how to navigate policies and procedures from day one, call Alpha Advisory Service for a free starter business consultation. Guidance delivered in a monthly mentoring session based on your income and specific circumstances is a phone call away.