Budgeting is one of the ways to direct priorities, i.e. it gives you an oversight and helps you segregate personal and business funds.
Take a close look to your finances according to the next tips to remain safe and sleep better at night.
- Define business / project scope: now is the time to take your time and understand your own financials and ask all needed questions by evaluating where the constraints lie and what you can do about them.
- Determine time frame in which you will finalize the budget.
- Estimate costs according to previous years or previous forecasted plans:
- resources in people and equipment
- general and administrative costs
- fees
- supplies
- exceptional payments (provisions)
- Remember that your budget is just a forecast. It is necessary to update it during the year and whenever necessary. Make sure you have a strategy to justify what resources you expect to need.
- Monitor your resources and keep track on monthly expenses. It is very necessary to review the balance sheet, the profit and loss statement and the cash flow overview on monthly basis, because these documents give you an essential overview on your financial status. You can use software applications for such reporting or less sophisticated tools, such as Excel.
- Always remain transparent and involve all the team. This helps each understand the process and encourages the team members to have a sense of ownership and create ways to manage their parts of the budget.
- Consider requesting discounts for full payments or a payment in advance so that you have more disposable liquidity at hand. In days where cash is somewhat problematic because of all the fraud and Money Laundering issues, you can rely on payments directly through banks or cards.
- Remember to report your taxes on time. You don’t want to end up with penalties!
- Smarter money management not only allows you to have a clearer overview, it also permits to build an emergency fund and also create savings for future investments or spendings.
Keep in mind that the two best ways to fail a project are not delivering what was promised and/or going over budget.
In the end, budgeting, for businesses or personal accounts, assist in controlling the expenses and give you a sense of control over your cashflow. It is also a way to see money as a tool while your mind can focus on your future goals.
Happy budgeting!
PS: this was given as a talk and published in the Berytech newsletter on October 17, 2018
