Business owners: Avoid these 4 common business budgeting mistakes that could cost you
Budgeting in your business is essential since it helps you understand how you’re spending your money.
As tax accountants practicing in the Cannington area of Perth, we’ve noticed the same budgeting mistakes coming up again and again with clients. These are effectively eating into profits and increasing costs for these businesses.
So we thought it could really make a difference to pass on the four most common business budgeting mistakes for you to avoid…
The most common business budgeting mistakes to avoid:
1. Trying to keep up with others
It’s common for business owners to get competitive with finances - but it’s a dangerous road to go down.
You might admire your best friends’ cars or houses at times. But it’s never healthy to compare your funds to theirs. Who’s to say that you’re in the same financial class?
You need to come up with a budget that suits your income: this type of disciplined outlook can not only change your business - but your life too.
2. Forgetting the unexpected
A myriad of things happen in life that can throw you off budget. The trick is to remember that.
For example, your cooker might pack up or car break down. You’ll need to use part of your budget to fix such emergency situations.
By considering such unexpected incidences, you can come up with a contingency plan. Always spare some money and create a “buffer” fund for emergency situations.
3. Using outdated software
Software is very useful in helping business owners create a budget. It can also help you track your expenses to ensure you don’t overspend.
However, make sure that the software you’re using is up to date. Seek professional assistance from your accountant if you’re not sure what to use or how to use it.
4. Not paying attention to the smaller items
Some small business owners have a habit of only tracking the big expenses while forgetting about smaller ones.
It could be the $20 you’re using to polish your nails or the $5 daily coffee that is throwing you off budget.
All these small purchases can add up to a significant amount by the end of the month. Ensure you track all the little expenses you’re making.
Not sure how to budget effectively? Get help…
Watch out for the above common business budgeting mistakes and you’ll at least be on the right track.
Whatever your business in making, learning to budget properly means you’ll never be caught off guard by emergency situations.
This is paramount to the success of your business and, if you need help to get there, contact us.