So, you’ve sat down with your annual finances, stayed up until the early hours of the morning and drank the local coffee shop dry, and now your finished company budget is staring you in the face, challenging you to stick to it. It’s not easy—creating a feasible budget is hard enough, but sticking to it can be an absolute nightmare. However, with a little dedication and a bit of advice, making the company dollar stretch as far as you want it to is not such a daunting prospect.
Always, always, always have a slush fund—a portion of your budget unallocated to deal with major problems or expenses as they come up. No matter how well-planned the budget, if John from accounts somehow loses $50,000, or Mary the receptionist gets pregnant and requires maternity cover, or a virus crashes and wipes your server and causes all your computers to start displaying the lyrics to REM’s Bad Day, you’re going to be very, very thankful for every cent not allocated. Always plan for the worst, and if nothing goes catastrophically wrong then anything not spent from the slush fund can either go towards next year’s budget or a damn good Christmas party.
Learn to trim expenses wherever possible. Keep a weather eye on stock levels, employee overtime, charged expenses and company credit cards. Try and negotiate deals on rent every time the contract is up for renewal. Remember that if you can lower the expenses on the budget, you’ll have much more of a safety net inside your slush fund for that inevitable server meltdown.
Keep a close eye on the inflow of income, as this can also affect the slush fund and expenses. If you start to make more than you budgeted for, don’t clap your hands with glee and laugh all the way to the bank—put some of it into the slush fund or any other strained area of the budget.
Similarly, never let a month go by where you do not keep an eye on your budget, comparing it to monthly income and expenditures. Make it the same date every month, preferably some time around the 25th to give yourself enough time to start making changes before the next calendar month comes in. Check your cash flow, costs and potential liabilities with a fine-tooth comb, and when you’re done get somebody else to look at it for you. If you can snag an accountant to help out, even better.
Lastly, do not get downhearted if, at some point in the year, you realize your budget is completely messed up and you’re going to overspend this month. You need to remember that budget projections are a best guess only and nothing more—overspend is practically unavoidable in today’s uncertain economic climate. Face one simple truth—chances are that you will miss your estimates. Of course you try to avoid it, but if (when) it doesn’t make you the worst businessman ever or a dunce with no financial acumen. Just pick yourself up, dust yourself down, and look for ways that you can get the budget back on track next month—firing John from accounts for losing that $50,000 may be a good place to start.
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Budget is an important issue for every business and sticking to it is a big issue.Thanks for your support.