due_logo
Search
Close this search box.
Blog » Business Tips » 4 Budgeting Tips for Small Business Owners

4 Budgeting Tips for Small Business Owners

Updated on January 17th, 2022
Budgeting TIps

Every business needs well managed capital to scale. If you’re able to budget properly, then there will always be enough capital for you to grow your business. Every business operates differently which means there’s no universal formula to creating a viable budget for your company. That said, there are definitely some common budgeting tips and tricks that you can use to manage your money.

Here are four budgeting tips that every small business owner can implement into their own operation:

Always Save for Hidden and Unexpected Costs

Being able to identify potential hidden or unexpected costs is heavily dependent on research. It’s estimated that about half of all businesses will fail in the first five years largely due to a lack of capital. In order to prepare yourself for these hidden costs you need to do your research. Make sure you’re well aware of legal/regulatory costs, tax/compliance costs, insurance, competition, employee turnover, and more. The more areas you budget for the better off you’ll be. It’s always better to be over-prepared than the latter.

Remember Your Emergency Fund

Small businesses always need to have a back-up plan in the event of a disaster. It’s very common for a small business owner to want to dump excess cash back into their businesses to scale. This is totally fine and in fact recommended but only after you’ve set aside an emergency fund.

The majority of analysts recommend keeping at least three months of basic operating expenses in your reserves at all times. I personally recommend having three to six months of runway in your reserves simply because you’ll always need more than you anticipate.

Pay Down Your Debts

Very few business owners are able to get started without taking on any debt. Since it’s typically easier than acquiring angel or venture funding, small business loans are a common financing route for these companies. Additionally, small business owners may also take out business credit cards to make payments.

If you’ve taken on debt as a small business owner it’s always a good idea to pay it off as quickly as possible. This sounds like a no brainer right? Truth is, plenty of business owners will stick to paying their minimum payments each month. If you truly don’t have the extra cash thats fine, however I recommend getting these paid off as the money you owe back will compound.

Budget in Your Own Salary

Small business owners often get so wrapped up in budgeting for their business that they forget to pay themselves. Employees are a huge budget item for every business. That said, business owners often overlooked themselves as an employee and the most important one at that! Whether it’s a one man show or a 20 employee operation you should always make sure you’re taken care of.

Final Thoughts

Planning and maintaining your budget will require much more than simply implementing the budgeting tips mentioned above. As a business owner you should be fully capable of managing and analyzing your budget until you’re able to delegate it. Having that knowledge will be very beneficial in both your business and personal life moving forward.

Chalmers Brown - Former CTO of Due

Chalmers Brown - Former CTO of Due

I'm Chalmers Brown and former CTO of Due. I'm a big fan of technology and building financial products that help people better their lives. I have a passion for financial products that help people. I build complex financial infrastructure protocols that help scale financial companies. They are secure and support millions of customers worldwide.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.
Categories

Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More