When it comes to creating a budget, it is essential to estimate your spending as realistically as possible. Here are three common budgeting errors made by small businesses, and some tips for avoiding them.
1. Not Setting Goals. It is almost impossible to set spending priorities without clear goals for the coming year. It is important to identify, in detail, your business and financial goals and what you want or needs to achieve in your business.
2. Underestimating Costs. Every business has ancillary or incidental costs that do not always make it into the budget – for whatever reason. A good example of this is buying a new piece of equipment or software. While you probably accounted for the cost of the equipment in your budget, you might not have remembered to budget the time and money needed to train staff or for equipment maintenance.
3. Failing to Adjust Your Budget. This is one of the most common budgeting errors. Do not be afraid to update your forecasted expenditures whenever new circumstances affect your business. Several times a year you should set aside time to compare budget estimates against the amount you actually spent, and then adjust your budget accordingly.
Feel free to get in touch with us at GKM (info@gkmtax.com) if you want to discuss setting up a budget to meet your business’s financial goals.
