If you are just starting out and are in the process of launching a new business, budgeting correctly is one of the most important steps you can take to help you prepare for these initial stages. You can monitor and control your finances according to the budget you have set, and you can plan accordingly for any unforeseen circumstances. It can also give you the flexibility to change your plans if necessary and give you the room for manoeuvre that you need. Budgeting is a worthwhile step no matter what stage you are at on your business journey, but it is particularly useful when you are just getting started, find out why…
Ensures availability of resources
The number one purpose of budgeting is to make sure that you have enough funds and resources available to run your business. You will be able to predetermine where your money is being spent at a certain time, so that you can understand the funds that you have left over. Budgeting on a quarterly basis will help you to keep a close eye on your resources and monitor your spending.
Setting business goals
Budgeting is not just about the process of allocating funds for your business, it is essential for having targets to aim for and for measuring your success against these targets. If you go over budget for a period, you will know that you need to make the necessary adjustments or staying within your budget means you will have additional funds to allocate elsewhere.
Prioritise your spending
Budgeting allows you to allocate your funds more accurately, and clearly view your business outgoings. This means that you can identify outgoings that are more important, and prioritise spending in areas that you want to focus on or grow your business in. When prioritising your spending, it is important to consider the return on your investment in each area, and which has the highest potential.
Outside investment
If you are looking to secure additional funding for your business to substantiate growth or to be able to afford important equipment, budgeting is essential for attracting potential investors. You will want to have your spending clearly laid out for the quarter and year ahead, to show them where their funds will be invested and what your plans are going forward. Providing potential investors with documents that show how you have budgeted effectively previously will give them unmistakable evidence that you have a well thought out plan.
Adaptable to different situations
One of the benefits of budgeting and planning for the future is that you will be able to adapt to different situations. When running your own business, there are always likely to be unexpected situations or unforeseen circumstances that catch you off guard, so it is important to be prepared. Budgeting effectively can allow you to have funds left over in case you encounter any unexpected costs or emergencies.
Budgeting effectively can be an essential part of running your business successfully, particularly if you are in the preliminary stages of launching your business. Our experts at Omer & Company can offer you a helping hand, with start-up services to help you manage your finances effectively and successfully grow your business. If you would like to discuss your business and requirements with us, give us a call today on 020 8850 0700 or email info@omeraccountants.co.uk.
