Setting a Budget – How to Get it Right
Setting your budget for the year is one of those tasks that most small business owners dread.
It’s difficult to anticipate costs for the entire year, but there are ways that you can help be more accurate.
Examine Last Year
This seems obvious, but some small business owners fail to do this. Go over last year’s budget line by line.
Some items will not roll over to the new year, but many will.
Include Reps From Each Department
When setting your budget, it makes sense to include a representative from each department, such as admin, sales, design etc…in the budget meeting.
Get their feedback about what their department needs so you can more accurately plan the spending that will be required by each.
Talk to Vendors
Before setting your budget, talk to the vendors that you use regularly and ask them if they anticipate a price hike in the coming year.
If so, find out if they can give you a ballpark on how much higher the prices will go so you can include those higher prices in your budget.
Anticipate Probable Changes
Do you think you will be hiring new people in the next year? Giving across-the-board raises? Letting people go?
Sit down with someone from each department and talk about goals for the coming year and about what it will take to implement those goals.
Include Donations
Many small businesses love to give to charities in their communities, but some neglect to include these donations in their budget.
You don’t need to select the exact charities at budget time, but instead decide on a total dollar amount per month or per year.
You can decide exactly who to give the money to throughout the year.
An accurate budget can actually help you achieve your desired bottom line. Put the time in up front, and that budget will work for you all year.
