SME India: 5 Things Small Businesses Need to Know About Sound Budgeting

A business needs money to run. It is the oxygen that fuels its systems. Ideas and plans and initial savings can only get you so far; but when the money runs out, sometimes unexpectedly, a business is caught on the wrong foot. Small business financing relies on a budget plan that will see you through all the times, good and bad.

Here are five points to creating a sound business budget:

  1. Be Realistic

You, and you alone know the strengths and weaknesses of your business and the market. Be realistic and factor in slack periods or a slowdown in sales. Study the market, look at the sales figures from the industry in the previous 2-3 years to spot a trend and plan your budget accordingly. There are many ways through which you can make the most of your budget, however small it might be.

  1. Budget More Frequently

Large organizations can manage with a yearly budget. Smaller businesses, such as yours, need smaller and regular revisions to achieve long-term goals.

You can spot sales lags or rising expenses; you can re-evaluate your growth trajectory and allocate funds to a different part of your business if you feel the need to, or even reassess how well are the funds being utilized.

With quarterly or even monthly (if you can make the time) budgets, you can course correct quickly rather than allowing a bad decision to continue undetected for far too long without any intervention.

  1. No, You Don’t Need That Fancy App Or Industry Experts

It might be tempting to turn to the latest apps that you spot in the market. However, the answer to your business’ budget lies within you and not in the hands of an industry expert or a fancy new app. Save the money and invest it back into your business.

Yes, there will come a time when you will need more minds, and you will need to rely on technology, but the time is not now. No one knows your business and its needs better than you. You need you.

  1. Have a plan B Ready

It never hurt to be well-prepared. Your current budget plan has been made keeping in mind certain scenarios. But, at the risk of sounding clichéd, life is unpredictable. You never know when the winds change direction. A client could stop working with you, an important employee could quit, a fire, a theft, a system hack – smart entrepreneurs are ready for such risks.

You need plan B. Something to fall back in and allow you to continue running the business without a hitch.

  1. Extra Capital Planning

By common definition, budgeting need not mean scrimping. When you make a budget, you are not just preventing death by cash-flow crunch, but also utilizing the additional capital wisely. You could put it back into the business for short-term growth, or invest it in an external money market account. If you are confident about the growth of your business, you can even make a long-term investment such as buying property or overhauling technology. Small business financing can benefit from extra capital planning.

Use these tips to make sure that your business operations run smoothly. If you have any concerns, you can always reach our team at