Perhaps one of the most basic small business tips that a business owner can pass on to an aspiring entrepreneur is to establish efficient budget management. Assuming that it’s your goal to sustain your business and grow it to scale. Great businesses start with awesome and unique ideas, but the pragmatic truth is that it’s not what makes them last for the long haul.
What makes a small business survive and thrive disruptions, even global pandemics, is creating solid systems and processes that may be boring but necessary.
Let’s get right to these small business tips that will make you fall in love with going digital by the end of the article.
1) Budget with a spreadsheet
It pays to be very meticulous with your templates. Keep a comprehensive financial spreadsheet that details your startup costs, operational costs, software subscriptions, revenue breakdowns, existing assets and liabilities.
Start with recording your sales figures on Excel, as well as additional sources of revenue. These are income from investments, loans, and other expenditures.
Always be aware of your fixed costs. These are everything you usually spend on on a month-to-month basis. These include no fail items such as rent, utilities, salaries, bills, gas, and other fees.
Next, list down your variable costs. These are purchases that don’t have a fixed amount and vary from month-to-month. Items that are usually lumped in this category are transportation costs, raw materials, marketing/advertising costs, events, and others.
Lastly, account for possible purchases that happen only once. The amount of money you keep as profit should be enough to support you comfortably – but you should also keep enough cash in your business as a safety cushion for a rainy day or for investment opportunities.
2) Manage your expenses better
As a natural next step to number one, you’ll be able to track, manage, and even build a budget projection. But as a starter, a good benefit of regularly doing your cashflow sheet is to see where costs can be further reduced.
Start by going through all your monthly subscriptions. That way, you can identify which expenses are wasteful and which expenses you must eliminate to increase the liquidity of your working capital. You have to take note, though, that cost-cutting without considering the real needs and demands of your employees, customers, and partner vendors may produce short-term benefits, but also poor long-term results.
3) Learn when to take a loan
When a small business owner is close to its financial data— balance sheets, cashflows and all —you’ll know that debt is inevitable in any business. Analyze your capability to secure a loan, especially when needed by checking if you’re paying too much in interest on your existing ones. If the problem is that you have never actually taken out a loan and don’t have collateral for it, then the perfect route for your small business would be to try getting a quick personal loan.
Digital banks, such as Tonik Bank, are offering collateral-free personal loans. You can apply for a loan through a mobile app even if you don’t have any credit history. The process usually takes around 30 minutes and you can apply for 5,000 PHP to 50,000 PHP. You can choose between 6 months and 24 months installments. All you need is a valid government ID and 1 month pay slip.
In conclusion, if you want to grow your business, it’s an absolute must that you learn how to budget using a spreadsheet. This will help you become more organized and will enable you to manage your finances better. Applying for a personal loan may also be necessary if you can’t get a business loan yet for your fledgling business.