Tips to Establish Your New Business Budget
When you start a business, one of the natural expectations is that there will be challenges and curveballs. Some businesses rise to the challenge, while others sink, but being prepared has always been critical. In 2020, the curveball tossed our way was one that nobody saw coming in the form of a global pandemic, and all the fallout that came with it.
Sadly, many businesses have had to close, and others continue to struggle months later as the quarantine orders remain in place, and economic activity drops. If your business is still fighting to persevere, one of the most important tools you need to consider is your business budget. In particular, your company budget was likely set with ‘normal’ times in mind. However, we are no longer in those normal times, and you should consider adjusting to a new business budget that can help minimize losses and maximize functionality during COVID-19.
If you need some help figuring out where to start, here are some key tips to establishing your newer, leaner business budget:
Look at Recent Trend Numbers for your Business
When you built an initial business budget, you may have planned accordingly for the number of customers, amount of business, and business expenses. But, most businesses likely didn’t plan for the long-term economic fallout that COVID-19 has brought, so your earlier projections need reevaluation. Now that we’re many months into the pandemic, you can at least see the trends of what type of business you’ve been able to keep. Lean on those more recent numbers heavily to plan out what you can expect and afford moving forward.
Recognize the Value of an Emergency Fund in your Business Budget
Emergency funds are there for financial planning purposes, to serve as a safety net when something unexpected strikes. The COVID-19 outbreak certainly falls under the category of unexpected events, so hopefully, you were able to stock away a few months of reserve funds. If you did, don’t be afraid to dip into it as you need now. That’s what it was there for. And if you didn’t have an emergency fund, it’s not too late to start. As you build your new company budget, be sure to find room to set aside funds to build up this safety net for yourself.
Prioritize Your Payments
As you evaluate your cash flow, you should critically evaluate where payments will go. You’ll have immediate bills, fixed business expenses, and various levels of short-term to long-term debt. As paying the immediate bills is critical, be sure to look carefully at various debt payments you have. Some might be forgivable, some might allow you to defer them, and some may qualify for government-based assistance. Your new business budget should build in these aspects to determine where your funds should be going first and working outwards from there.
Reevaluate Long-Term Plans
You may have had plans to expand, open a new location, or dip your toes into a new product or service. While you can keep those ideas in mind, it’s important to reevaluate your long-term plans. The most important part of your business budget, while uncertainty continues, is simply to keep the business afloat. That may mean that 2021 plans have to be put on pause, but make sure to keep a critical eye on what’s most important.
If your business is struggling amid COVID-19, and you need help creating a new business budget, you can reach out to the professionals at Tobin & Collins today!