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How to manage your budget

Budget management really requires two things: good planning and good discipline. Sometime it also requires having a plan B. There is a lot to learn when managing your budget and the bigger the business, the more there will be to learn. Here are a few suggestions that you might consider when trying to manage your business's budget.

Good planning when making a budget for your business means making a reasonable estimate of your revenue and allocating less than that for every possible expense. Of course, you will always hope for optimal income but when you are making the budget, it is best to plan on minimal income. When you have an estimate about how much is coming in, make an itemized budget that accounts for all expenses, and invests money into things like advertisement and employee development. It is important to include some saving in your budget just as you do for your personal budget. If you can build up a little cash cushion, you will be able to handle budgeting "surprises" when they come along.

Once you have a reasonable budget drawn up, you will have to be diligent to stay within that budget. An important part of budget management is continual assessment and reassignment of funds. You should definitely check your budget once a month in order to stay current about exactly what is going on financially. You will also want to make month-to-month adjustments. If your utilities bill is going to be through the roof one month, you will want to anticipate that and cut the budget on another, less vital area. In general, however, you will not want to cut anything. Your goal should be to have every item on the budget within the budget. If you can manage that, you are an epic budget manager!

Of course, things don't always go as planned. If things get way off track, you should consider building another track. It is good to have plan B ready incase things don't go according to plan. If any particular budget item goes over for a couple of months in a row, get on it. You need to figure out why you are consistently over budget, then either fix it or adjust the budget. Some things, like rent, will change all at once and sometimes with no warning. You will have to adjust the entire budget to accommodate these sorts of big changes.

Sometimes you will have to go over budget. Don't get so rigorous about staying within budget that you miss out on big opportunities. If some budget-busting event, business deal, or investment opportunity comes along that is going to make you money in the long run you should jump on it. The bottom line is not the budget. The bottom line is the bottom line and the budget is just a tool in achieving the biggest possible number on the bottom line. Part of budget management is looking to the future and learning to balance a long-term budget with a short-term budget.

Give yourself time to learn the art of budget management. Don't get frustrated if you are consistently over budget. Instead, think of every over-budget month as an opportunity to learn more about business management and the art of finance. Actively pursue solutions to your budgeting problems. If you cannot solve your budget problems, get help. You can hire a consultant to look at your budget and give you suggestions on what you might change to get better results. Don't quit trying; you will eventually come up with a budget solution that your company can work within.


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