No matter their size, all businesses need a budget. If they’re big or small, managing cashflow and controlling expenditure is crucial if the organisation is going to survive and thrive. A well-structured and well-monitored budget will allow the company to know where to invest more funding and where to cut wasted spending in order to be more profitable.

A well-planned budget will also allow small businesses to see how many sales they need to cover costs, figure out how much money they can reinvest and find out when they can afford to hire help and additional support staff.

Know your numbers

First and foremost, for any budget to be effective you need a good understanding of your numbers and accounts. Don’t just guess at what is coming in and going out. You could be making assumptions that aren’t true and therefore basing the designation of your funds off the back of figures that don’t add up.

Go digital

Budgeting has changed in recent years and is much simpler than many people expect. Whilst creating a budget is tedious and tiresome, new technologies have made them much less complicated. Microsoft Excel, for example, is straightforward to use but incredibly useful. When new figures are inputted into the budget the software updates the rest of the spreadsheet and your overall revenue and profits is calculated.

What to include

Making a budget is made easier once you know what you should put in it. These include your income (revenue), which covers things like regular work and expected future income. It should also include your expenses (costs) which covers things like payroll, rent, office supplies and overheads.

All of this can be done in-house but it can take up a tremendous amount of time. Many hours will be spent trawling through your accounts that could be put to better use elsewhere in the business.

It is almost always more cost effective to hire an accountant to look after your finances and manage them efficiently. Whilst you can have access to your accounts, the day-to-day managing and monitoring should be done by a professional accounting firm.

Lima Accountancy provide a wide range of financial support and accounting services to help your small business grow and increase its profitability. The services we provide come with a wealth of experience in different entitlements, reliefs and allowances you might be eligible for.

For more information on budgeting and financial services, call Lima Accountancy on 0113 844 0402.