18 Budget Tips All New Entrepreneurs Need to Know

When most people get excited about the idea of starting their own business, they’re usually not thinking about budgeting.

Let’s face it: budgeting your business’s finances is necessary and important, but it’s usually not too fun. Many small business owners—especially newer entrepreneurs eager to get started—just see it as a necessary evil.

The trick to budgeting?

Doing it smartly. The more you can save without cutting corners, the better off your business will be—and the more you’ll enjoy it. Check out these 18 tips and tricks to budgeting for your new small business.

1. Separate your personal and business finances.

Step 1 in starting a small business: keep it separate from your personal life.

First of all, this will help you budget. If your personal expenses intermingle with your business expenses, then you won’t be able to get an accurate estimate of how much money your business brings in—or how much it needs to survive. You’re one of your business’s biggest costs, so treat yourself that way.

Plus, by using separate budgets and credit cards, you’ll save yourself from major headaches later on.Starting early will help you out.

2. Set aside cash for taxes.

This might seem obvious… In retrospect. But too many business owners, especially those new to the game, tend to forget or underestimate this recurring expense.

To be safe, open a separate bank account and put aside 20% of your gross revenue or 35% of your net revenue each month. If you don’t plan ahead for taxes, you’d just wind up paying much more in late fees and could even risk an audit.

3. Keep your receipts. All of them.

First-time entrepreneurs might only take their largest expenses into account when budgeting, but that’s a mistake. Small costs, over time and bundled together, can make a big impact.

So keep your receipts and take meticulous records, in order to successfully understand your business’s financials and budget for the important growth-related expenditures down the line.

4. Haggle with your suppliers.

You might feel uncomfortable questioning a supplier’s price, but as long as you’re polite, it can’t hurt to inquire.

Can you get a discount if you buy in bulk? Or maybe if you pay them off early? Cutting costs at the supplier level can go a long way to support your business’s cash flow.

5. Always shop around.

Never settle for the first deal you find—because there might be another one waiting right around the corner. It’s often well worth your time to investigate 3 or 4 options before picking the right one. Even if they’re all the same, you can rest assured knowing that your due diligence might save your business money next time.  

6. Know what you can lose.

Has business been slow? Did something unexpected happen?

If so, you’ll want to make sure you can quickly and easily isolate your non-essential expenses. Those catered lunches and happy hours might not make the cut—but your payroll and utilities bills will need to.

7.  Round up your expenses.

When you’re planning ahead, it’s never a bad idea toround your expenses up. Don’t do so in a way that would dramatically change your budget, but rounding up will ensure you save more than you need—just in case you miscalculate or need to accommodate for a surprise cost.

8. Freelancers before full-time employees.

Need a writer? Designer? Delivery person?   

Consider hiring a freelancer or contractor instead of a full-time employee, especially when you’re just starting out. You’ll save money on sourcing, hiring, and training, not to mention payroll fees, taxes, and more.

9. But when you do hire, budget the full cost.

Hiring a full-time employee can be way more expensive than you realized.

You’re not just paying another salary… You have to budget for training materials, additional equipment, insurance, state and federal taxes, potential payroll fees, and more. All that can make up 30% of a full-time worker’s salary and wages, so plan accordingly.

10. Buy used.

Whether you’re in need of electronics or office furniture, you should shop smart when you can. Cut costs by purchasing refurbished equipment and used or clearance furniture, or by renting.

One tip: don’t skimp on the stuff you need. If a state-of-the-art piece of equipment is vital to your business, then it might not be worthwhile to take your chances with a hand-me-down.

11. Stay at home.

If you’re just starting out, then consider working out of your home until you actually need a brick-and-mortar location. You could be saving tens of thousands on rent, furniture, transportation, and more—at least for now.

That’s not to mention the tax deductions you can take if you operate out of a home-based office.

(Similarly, you could always start with a portable cart or food truck before expanding into a location if you want to test out your business’s viability.)

12. Use budgeting software.

Programs like Mint can help you track, monitor, and analyze your spending habits—so you can budget your cash better, online and on-the-go.

Many of these programs are free, easy to use, and intuitive: you can see your spending by category, which will help you figure out where to cut your expenses.

13. Take your debt into account.

Taking out a small business loan can help push your business forward, but you never want to be late on your loan payments—that can hurt your credit score and cause all sorts of trouble. 

So instead, plan ahead for your loan repayments in your monthly and yearly budget.

14. Partner with your neighbors.

Do you work next to a few other small businesses?

If so, you could partner up to split advertising costs for a sidewalk sale, an email mailing list promotion, or a flyering campaign. Get creative—what can drawtheir customers into your store?    

15. Volunteer for local events.

If there’s no fee, why not speak at or help organize local events? You can meet fellow business owners in the area or network with your potential customers. It’s a no-brainer: free advertising.

16. Get insurance.

Plenty of new entrepreneurs might feel like this is an expense they can skip in the beginning, but you’re usually better off safe than sorry. It’ll make sense to budget for insurance costs now, so that one huge, unexpected expense later on doesn’t sink your business.

17. Join a business association.

Although you’ll have to pay membership fees, joining a local business association can be a great way to network, receive discounts, and pick up fresh ideas. Take a look at your nearby trade associations to figure out whether the benefits are worth the cost.

18. Ask for help!

Even financial experts ask each other for assistance and advice. Whether you need to seek out a professional accountant or bookkeeper, or ask a relative or friend to take a peek at your business’s budget, don’t be shy. The potential to catch a problem ahead of time is worth it.

Budgeting may not be the most exciting part of running a small business for most new entrepreneurs, but saving money to grow is nothing to sneeze at. Use these tips to get the most out of your business budget.

Jared Hecht is the CEO of Fundera, an online marketplace for small business loans. You can find him on Twitter at @jaredhecht.

Reference: http://www.forbes.com/sites/jaredhecht/2016/11/29/18-budget-tips-all-new-entrepreneurs-need-to-know/?utm_campaign=coschedule#