4 Things to Remember to Add into Your Business Budget
Running a business is something that takes a lot of time, effort, and, of course, money. There is no getting away from the fact that, as the old saying goes, you need to spend money to make money. Although it will depend somewhat on the exact sector and business you are working in as to how much you’ll need to pay out for various reasons throughout the year, knowing what those costs might be and being prepared to meet them is much better than not knowing and being unpleasantly surprised.
This is why it’s so crucial to create a business budget. When you do this, and you remember to include all the relevant details, you will know exactly what you’re going to need to spend and what’s left over for other important purchases. Read on to discover what those ‘relevant details’ are so you’re not left scrambling to pay a bill when you really wanted to buy a new piece of equipment or expand your business into a new store, for example.
Hiring New Employees
The costs associated with employees are some of the highest you’ll need to deal with in your business, but they can easily be left out of your budget. If you currently work by yourself, or you have a small team, you’ll take any costs associated with those people (and yourself) into account. But what would happen if you needed to hire someone else during the year? Would you be able to? The answer is that you would only be able to do this if you had already budgeted for it. If not, you wouldn’t comfortably be able to hire anyone, and that could mean your business having to stop growing for a while.
Work out how much it costs to hire someone new, and ensure that this cost – which should include advertising, recruitment fees, and training, as well as their salary – is accounted for in your budget. It might be that you don’t need to hire anyone, or that you haven’t made the money you would need to be able to, but unless you know how much it would cost, determining this would be impossible, and you could make an expensive mistake.
Your Business Premises
After salaries and hiring costs, the cost of your business premises is something that absolutely needs to be accounted for in your business budget. This can be a very large expense, and you must be sure that, before you sign a lease or agree to a mortgage, your business can sustain the building you want. The cost of the building is something that will recur each month, so it’s something that needs to be dealt with urgently. Rather than a one off cost that you can borrow money to pay if you need to (although this isn’t always advisable even for one-off purchases), this is ongoing, and you must be sure you can pay each month or run the risk of no longer having anywhere to work from.
Of course, the rent or mortgage payment isn’t the only thing that comes with having a business premises. You’ll also need to pay for the utility bills, and perhaps even some form of security, not to mention insurance and rates or taxes. Make sure that every element is in your budget, so you know exactly how much the building costs each month.
Buying New Equipment
You might start your business with a loan and buy lots of new equipment that will help you get started. Or you might not want to borrow any money and purchase second hand equipment instead. Or perhaps the loan would cover used equipment. The point is, it’s easy to forget that one day you’ll need to replace that equipment because it is out of date and needs upgrading or because it breaks down and is no longer economical to repair.
If you don’t account for these costs within your business budget, when the time comes, and you need new equipment, you may not have the money spare to make the purchase, and in some cases, this could mean not being able to do any work.
It could also be that you do have the money to buy equipment, but you aren’t aware of that because you’re not paying attention to your budget. In this case, the essential items you need could be just within reach, and therefore the next phase of your business’s growth could be close, but you miss the opportunity because your budget is not up to date.
Advertising Your Business
No matter what kind of business you run or how you run it, without a good advertising budget, you’re not going to be visible, and you’re not going to make money. Therefore, you must ensure you put aside enough money within the budget to market your company in the right way. This could mean boosting posts on social media, or perhaps you like the idea of buying promotional gifts from Dynamic Gift NZ. Maybe you feel that a radio ad is going to get you the most visitors and therefore sales.
Determining the right way to market your business is something you will also need to do, and it’s crucial if you want to budget correctly. Find out where your target market is most likely to see any advertising and what kind of marketing they are most likely to engage with. Once you’ve done this, you can budget the right amount of money for doing exactly what you need to do.
As you can see, there are many different things that you must remember to include in your budget. Missing just one of these items, or items that we haven’t mentioned in this article, could be a disaster, as you will think you have more money than you do, or you miss out on something because you think you don’t have enough available to spend.
Making your budget may be tedious work, but in the end, it could be what saves your business.