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Budgeting for Your Small Business


Budgets are a necessary tool for constructing and growing a business. Think of a budget as bookends for all that your business needs, providing it with a financial structure while also keeping it organized and providing a strong foundation for the expansion and future growth of your small business.

Create a Master Budget. Begin the budgeting process with a master budget that provides a guideline of what you currently have and what you will need based on planned inputs and outputs. This should include payroll, raw materials, interest and tax payments and other bills. Once the budget is prepared, then determine if there are any variances between what was expected and budgeted for and what actually occurred. INC magazine offers a concise budgeting resource that answers why you need a budget, offers components of a budget and shows how the Small Business Administration defines basic budgeting components.

Remember that No Two Clients Are Alike. Most relationships are based on meeting agreed-upon needs and expectations but sometimes the reality does not match up like we hoped that it would, especially in the area of timely payment. Several QC Capital clients working with government contracts have found that their invoices are paid more slowly than invoices from non-government contracts.. This can occur because more than one contractor may be managing and administering the bills for the government. Sometimes this can result in a lag in payment of more than 60 days. When payroll occurs on a weekly basis, this lag in payment can create a serious crunch on a business’s cash flow. A factoring solution from QC Capital is one way a company can maintain their business during periods of slow or irregular payments.

Frequently Review and Assess Budgets. Slow-paying clients are just one more reason why small businesses should review budgets frequently. Consider creating a 12-month budget that leaves room to account for monthly or bimonthly expenditures that are unique to your business cycle. At these times it’s also worthwhile to assess your current list of suppliers as a way to look for cost savings throughout the year and not just in the fourth quarter. If you’re a business that’s looking to expand but cash flow is a problem because of unpaid or slow-pay invoices, consider exploring the option of invoice factoring. This can provide capital when you’re ready for your business to grow.

Share Budgets to Motivate Company-Wide Goals. An up-to-date budget is not just important when you’re looking for funds from banks and financers. It can also be a great tool to include employees in day-to-day business operations as well as show them the long- and short-term goals for the company. Monthly, quarterly or semi-annual staff information sessions regarding the budget allow employees to clearly see the direction of the company and how their duties and expenditures relate directly to the bottom line.
QC Capital, a Kansas City-based factoring provider, offers ready capital to help your business expand and grow. Contact QC Capital to learn how.