Five Suggestions for Small Business Budgeting in 2020
Attention, small business owners! Have you begun budgeting for 2020? What are you waiting for? The economy may be booming, but global recession and political upheaval can always be waiting around the bend. Whether your plans are to expand or to toe the line, approach your 2020 budget with the following in mind:
Emergency Fund – There will always be unexpected costs when it comes to running a small business. You need to plan for as many eventualities as possible. This includes natural disasters and cybersecurity attacks, as well as less catastrophic costs, such as tariffs or reduced consumer spending. Cut costs where possible and audit your personal spending to redirect funds toward a nest egg.
Affordable Financing – Now is the time to apply for a business loan, line of credit, or some other business financing product. Grow your business while your finances can support it. Waiting until you have pressing, bank account-draining concerns is not ideal. Small businesses with a strong cash flow are far more attractive to banks and lenders than ones that appear to be headed into a downward spiral.
Return on Investment – Return on investment (ROI) is the goal at every stage. However, in anticipation of possible catastrophe, ROI becomes even more important. If you have been experimenting with social media marketing or influencer marketing, you may end up acquiring new customers or building your brand. Risk will always be a part of business. Keeping ROI in mind, try investigating other forms of marketing. For example, e-mail marketing is still known to retain existing customers and turn them into loyal buyers. The focus may not be on acquiring new customers, but it boosts profits, which means a better ROI.
Fixed Cost Commitments – Examine any fixed cost commitments. Look for money that you may have tied up in the long term, such as subscription-based software solutions. Examples include customer relationship management software or email marketing software. They probably offered you a discount in exchange for a long-term deal. That is fine until you can no longer afford the deal and need to curtail costs. Prevent your infrastructure from coming to a screeching halt by budgeting for flexibility. Use a co-working space if you are just starting. Signing a multi-year commercial lease is the perfect example of a fixed cost commitment depending on the type of lease you sign.
Advice of a CPA – Certified public accounts are the very definition of unsung heroes. A CPA single-handedly looks after your accounting, bookkeeping and finances. Bring your books to the professionals. Let them advise you on the best course of action. This is a sound investment. As a matter of fact, a CPA may not agree with one of the above suggestions. Go with the pro. Go with a person. Accounting software and automated tools are no substitute.
Do not let politics or naysayers get in your way. As with any other year, you have the power to make 2020 your best year yet. Start with a solid foundation of excellent, responsible budgeting.
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