2019-09-27 17:26:15

Balancing your budget for 2020 starts now.

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As we approach the end of 2019, it’s time for us business owners to turn our attention to planning for 2020.

Planning for any new year is a daunting task, since the future always holds uncertainty—but that’s especially true for 2020. The economy is booming, but tariffs, global recession fears, and political upheaval all complicate the outlook for many business owners. 
Hopefully, your business is in good shape as you head into what could be an unsteady period for the economy. But whether you’re eyeing plans for expansion or just hoping to hold steady, there are some budgeting tips you should keep in mind as we forge ahead. 
Here are five budgeting tips for small businesses, and their owners, in 2020. 

Concentrate On Your Emergency Fund

Having an emergency fund on hand to help you deal with unexpected costs is a stalwart of business budgeting. That said, 2020 may prove to be a year loaded with unexpected costs, so the more money you dedicate to “just in case” planning, the better. 
I’m not just talking about costs related to tariffs or reduced consumer spending. More and more American businesses are being affected by catastrophic natural disasters, from hurricanes in Texas to wildfires in California. They’re also the victims of cybersecurity attacks that compromise their websites and steal their customers’ credit card information and personal data. A report from Verizon shows that


43% of cyber attacks

target small businesses. 

An emergency fund can help get your business back in action right away after a disaster (either natural or technical). In fact, having that fund is critical: According to FEMA, 


90% of businesses

that don’t reopen within five days of a disaster will fail within a year.  With this in mind, start building your emergency fund considerations into your cost of doing business by cutting costs where possible, and auditing your personal spending to redirect funds towards a nest egg. 

Apply For Affordable Financing Sooner Rather Than Later

If you’re considering applying for a business loan, line of credit, or other


business financing product

to help you grow or support your business, don’t wait until your financials are in worse shape than they are now.  The best time to apply for financing is when you don’t need it—because your cash flow is strong, or there aren’t any pressing, bank account-draining concerns to deal with. Banks and lenders love seeing a small business with strong and growing coffers, not those that are experiencing a downturn.  This doesn’t mean it’s time to take out a business loan just because. You can apply for flexible forms of financing, such as a line of credit or elite business credit card, that don’t require you to actually take out funding until you need it. Applying now, however, can help you lock in affordable interest rates and terms that will pay dividends down the road. 

Focus On ROI

Every investment you make in your business should consider the return you’ll get. ROI, then, is a hugely important metric for small businesses at every stage. 
When there’s a potential for things to go south quickly, however, ROI takes on an even greater importance. 
For example, there are times when experimenting with new forms of marketing—social media marketing, or influencer marketing—makes sense for your business. These tactics can help you acquire new customers and


build your brand

Other forms of marketing, however, have a better ROI. Research shows that email marketing


has the best ROI

of any marketing tactic—perhaps because it focuses on things like retaining existing customers and turning them into loyal buyers, which boosts profits way more than just acquiring new customers.    Take this mindset into all of your investments in your business. What’s going to have the better ROI this month, this quarter, and this year? 

Reduce Your Fixed Cost Commitments

Flexibility is going to be key in 2020. Therefore, you’ll want to reduce the amount of money you tie up in long-term commitments, even if that means sacrificing a small percentage of your profits. 
For example, many subscription-based software solutions (customer relationship management software, email marketing software, etc.) give you a discount if you agree to a long-term deal. But what happens if, in the middle of 2020, you find that you need to curtail costs and can no longer afford your deal? A huge part of your business’s infrastructure may come to a halt, slowing down profits or worse.
Budgeting for flexibility is also the appeal, for some entrepreneurs, of using a co-working space to start their business, rather than signing a multi-year commercial lease. 
Flexibility is worth paying for in some contexts. Consider the big picture when you’re signing up for something that will incur long-term fixed costs, and decide whether you’d prefer the ability to scale down if needed. 

Get The Advice Of A CPA

A


Certified Public Accountant

is an elite accounting, bookkeeping, and financial resource. Taking the time to bring your books to a CPA and letting them advise you on the best course of action is one of the best investments you can make in your business.  In fact, a CPA may advise you to not follow one of the above tips I outlined. That’s okay. Your business is unique and may need unique insights that only someone certified to provide expert advice can provide.  For the most part, using accounting software and automated tools to track and cover your finances works year-round, particularly for small businesses and sole proprietorships. But getting the advice of a CPA on a bi-annual or annual basis can be a huge benefit as well.  *** It’s an exciting time to be a small business owner. Opportunities for growth are everywhere, and it’s possible that 2020 could be your best year yet. In order to take advantage of those opportunities, however, you’ll need to start with a solid foundation—and that means excellent, responsible budgeting. Start with the above tips and you should be in good shape.  



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