The size of your business does not determine whether you should budget or not. Most financial experts recommend that individuals and families create a financial plan. This allows you to set financial goals, cut unnecessary expenses, and ensure that commitments are met on time. All these advantages apply to companies as well.
Some helpful tips for kitchen cabinet business financial planning
Know your real income as a small business
Financial stress and lack of capital are among the top challenges facing small business owners.
Before you can create a budget, you need to know: is that true? Does your business make money and how much? When will the income come? If you answer these questions, you already know how much money you’re working with. That’s the amount you have to pay bills, staff and yourself, plus invest in growing your wholesale kitchen cabinets business.
Understand your expenses as a small business
Once you know how much you’re taking in, make a list of all the small business expenses.
If you’re not sure what expenses to list, create a monthly expenses report for the past three to six months. Determine the average monthly expenses for each area to estimate for the future.
Link your spending planning with the sales expectation
Take your time reviewing your spending. Determine if they are necessary and important. You may be able to reduce some expenses to build financial reserves. In some cases, you may need to move expenses from one area to another. Also get an overview of how much you are dependent on loans and whether your future, expected income can cover the instalments.
Create a business plan that you can refer to
Once you have set goals for your business, create a written business plan. The plan should include at least the following:
- Income forecasts divided into manageable periods. Some companies break down sales for each individual day. Other SMEs plan budgets on a monthly basis. You may need to try which variant of financial planning works best for your business.
- Spending broken down into periods that make sense for your business.
- Expenditure planning on the expected expenses in the various areas
- Comparative figures for the last month including expected income and expenses and actual figures.
Explain financial planning to employees and hold them accountable
Share the numbers from your business plan with your employees as appropriate. You don’t have to and shouldn’t reveal every detail. For example, the employees must not know how high your wage costs are. However, they should understand what funds are available for their particular department.