There isn’t a hard and fast rule for managing your money well. But there is a rough guide to business finance that you can follow, whatever your industry or growth stage.
We’d like to lend some of our own budgeting ideas. Below, you’ll find several dos and don’ts to take forward for your own business aims.
Do – overestimate your outgoings
It’s much better to think you’re paying more than you actually do, instead of less. Underestimating the cost of bills, overheads, insurance and repairs will endanger your financial stability. The price could be hiked up out of the blue, which may coincide badly with (for instance) a new hire or investment. Instead, plan for more payments than you may actually make. It’ll leave you with a buffer zone for surprises. 5-10% on top of your baseline estimates is a good figure to start with.
Don’t – leave seasonal business out of the picture
There may be high and low points for your business – the sort you can predict. If revenue is set to slow during certain months of the year, factor that into your planning. Save some of your excess profits in more fruitful weeks to cover the shortcomings elsewhere. You may even wish to use a different business account so the savings are clear.
Do – use a fixed-rate lease agreement
Alternative finance can have a transformative impact on what you can do and afford. Paying for something upfront could put the strain on your budget. That’s why measuring the costs out in smaller monthly instalments is often far more preferable. You can fund anything from software and IT systems to manufacturing machinery and fit-out furnishings – or even just a cash barrier to prepare for upcoming tax bills. Plus, a good lender will give you a fixed rate, so you’re confident you’re able to afford it. This certainty helps with any financial strategy.
Don’t – forget to list your expenditure
Remember that tax breaks qualify for all sorts of things, from vehicle mileage to overnight stays for business travel. Leased equipment is part of that too. Leased investments and capital assets are tax deductible, providing they meet HMRC conditions. This can quite easily result in thousands of pounds of savings each year.
Do – take regular looks at your budget
Nothing is static. There may be a time in which you have more spare cash to play with, or you have to strip back and become leaner… In both cases, revisiting your financial strategy regularly will help you identify any investments you can make or costs you can cut. Accounting software is a welcome form of support. It’ll draw real-time forecasts based on any inputted data, as well as lay out tax responsibilities.
Reach your extraordinary with Johnson Reed’s alternative leasing and loan services. We put you in touch with dozens of lenders around the country, each of whom can give your business – and its budget – a boost. From covering VAT bills and payroll to a whole range of leased equipment, we can help unlock your potential. Speak to one of the team today for more details.