How Beneficial Is It To Set A Budget For Your Business?
There is a simple business rule that all entrepreneurs should be well aware of – make more money than you spend! Even the worst of mathematicians know that it’s better to add money than to subtract money. So with that incredibly basic understanding, it begs the question – why do so many business owners overspend? While we’re sure that they don’t mean to, business owners who exceed their budgets likely aren’t keeping track of their budgets to begin with.
How important is it to have a budget for your business? Trick question – it’s, quite obviously, extremely important! In order to know, for certain, that any business requirement is affordable – be it inventory, staffing, advertising etc. – one must ensure that he/she has enough money to do so. Of course, no business can make money without spending it in the right areas. So, as Patricia Lotich explains on Yahoo.com, it’s wise to set targets.
“Budgets are used to project revenues and spending to help determine how the organization will achieve short term and long term strategy,” she explains, “Budgeting estimates revenues, plans expenditures, and restricts spending that is not part of the plan. For example, budgeting dollars for marketing may help to increase product sales.”
How does budgeting help you to take advantage of growth opportunities? Let’s take a look at the purchasing of inventory, as an example. Many business owners purchase their inventory on an “as needed” basis. And while this makes practical sense – you supply what is in demand – it may be beneficial to budget for times of the year when sales are bound to pick up. Buying in bulk can help a company save money on overall costs and therefore, earn more revenue when their sales increase.
Robert Gloer of IOU Financial expands on this. “You might find that buying inventory in larger batches lowers your price per unit, but that you’ll need to enlarge your storage facilities to take advantage of this cost break,” he writes, “A budget will help you discover and plan for this and many other opportunities to lower your costs and/or increase your revenues. It can also show you when it makes sense to borrow money to finance your business’ growth.”
How does budgeting help to remedy emergency situations? It’s never fun to have to experience unexpected costs. But things do happen. A sudden drop in business due to a seasonal change, inclement weather preventing customers from visiting your store and even vandalism or theft can force a business owner to spend more money than he or she would like. Proper budgeting can make emergency situations ones that are easily handled.
“Budget dollars need to be allocated for new equipment, aging facilities and new business ventures,” says Lotich, “For example, budget dollars need to be reserved to update equipment to ensure that employees have the necessary equipment to do their job. Aging facilities and equipment can have a direct impact on the customer experience so it is important to reserve resources to keep equipment and facilities current.”
At Synergy Merchants, we recognize that no matter how well a business owner budgets for his/her business, emergency situations can present situations where large sums of money are required for such things as repairs and replacements. In such cases, our merchant cash advance program comes in very handy!
For more information about our merchant cash advance program or to speak with one of our licensed funding specialists to get a free, no obligation quote, simply call Synergy Merchants at 1-877-718-2026 or email us at firstname.lastname@example.org.