Starting a business invariably involves accurate budgets to help balance financial accounts and create business goals. Budgets also help you measure how your business is performing. All too often, I come across new business owners who have not documented their financial strategies accurately.
Below are the three most common start-up budgeting mistakes and how you can avoid them.
1. Having no budget at all
To make your start-up successful you need to be able to accurately estimate how much money you will need, and how you will allocate the funds. Seeking qualified professional advice is a great place to begin when starting a new business.
2. Not budgeting funds for marketing
Not engaging in marketing essentially means fewer or no clients at all. Business owners have explained the wonders of the digital era and how they can market their businesses on social media – for free. Having a Facebook, Twitter or LinkedIn page and posting on it every so often does not constitute effective social marketing. Social Marketing takes up time and if you’re not connecting with your potential clients and customers on an emotional level, this may not be the strategy for you. When allocating a figure for your marketing budget, aim for at least five percent of the projected annual revenue.
3. Underestimating start-up costs
Many business owners are often shocked when they discover just how much start-up costs can amount to. Some costs are underestimated while others are completely forgotten. That’s why it’s imperative you seek advice from a professional who will make you aware of certain expenses or legal requirements. As you adjust to your budget each month, and ideally continue to save money, you’ll be able to start investing in bigger and better things.
The first couple of years in business can be extremely tough, but with the right tools, advice and various business related strategies you can move your business in the right direction. The satisfaction of following your passion makes starting a business so worthwhile.