The word ‘budget’ is usually accompanied by a sigh, most entrepreneurs aren’t fond of working with the numbers. But the unfortunate truth is that everyone has to budget – whether we like it or not. Drawing up a budget for your startup business can seem like climbing Mount Everest but it is important to understand that the amount of attention you pay to your budget can make or break your small business.
It’s a very well-known fact that most new businesses fail to succeed purely because of bad financial management. A robust and forward thinking budget is the foundation of good financial management so ensure that it’s as realistic and thorough possible from the get-go.
However daunting it might seem, setting up a budget doesn’t have to leave you pulling out your hair. Here are a few smart budgeting tips to help your startup’s financial management on the roll:
Ask and you shall receive – get budgeting tips from your peers.
The entrepreneurial community is a close one – as they say ‘birds of a feather flock together’. You are not the first and certainly not the last person with great ideas and big dreams starting from scratch. Many successful entrepreneurs are willing to offer a guiding word, especially about the tough parts of starting up such as financial management solutions. I’m not saying you have to ring up Richard Branson, but connect with other entrepreneurs in your vicinity or industry. They have stared down that Everest slope and would be more than happy to give you some budgeting tips to ease your climb.
The great thing about the advice of fellow entrepreneurs is that it’s more than just theory – they have experienced first-hand the failure of poor financial management and reaped the success of a powerful budget.
Plan for the worst to ensure you’re always covered.
This sounds rather dire, but don’t approach your budget with the expectation that everything you do is going to work first time and that you are going to be rolling in money. Underestimating is a big ‘no-no’ when setting up a budget for your startup. Never think that you won’t need extra cash to cover ad hoc costs, that you won’t have to do maintenance eventually or that sometimes you may not bring in enough money to cover your expenses. If you do manage to bring in big bucks then that’s great, but chances are it’s going to take a long time for your startup to be consistently profitable. Carefully go through every detail of your projected income, daily cash flow and overestimate your expenses. Be realistic.
You can’t go it alone – get some expert help with the books.
One of the most crucial budgeting tips for any entrepreneur is to get an accountant. It is possible to do your admin and financial recordkeeping yourself but when it comes to understanding your financial statements and doing your taxes it would be wise to consult your accountant. The sooner you get one the better.
Accountants are more than just the ‘tax guy’; they are numerical experts and can help you with the setup of your budget. You can rest assured that you’ll always have someone to help you should you get stuck with your recordkeeping or need advice with your business structuring. Also, don’t forget to include the cost of paying for an accountant in your budget.
Boost your financial management with online accounting software.
So you have budgeting tips from your peers, you’ve drawn up a realistic financial plan and your accountant is on call, but you need to keep on top of your daily financial management to stick to your budget. Unfortunately this is all on you, although it doesn’t have to be a dreaded and time consuming task.
SMEasy is in your corner with our easy-to-use online accounting software that requires no accounting knowledge to operate. We automate and simplify daily financial administration tasks such as quotes, invoices and daily cash flow management so you can easily stick to your budget. Need an accountant? We can help with that too. We’ve partnered with the South African Institute of Professional Accountants (SAIPA) so we can get you in touch with an accredited and affordable accountant.
For more budgeting tips and further insights into managing your money matters, download our Guide to Startup Finance 101.