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 can keep in mind as we forge ahead. 

Here are five budgeting tips for small businesses, and their owners.

Concentrate On Your Emergency Fund

Having an emergency fund on hand to help you deal with unexpected costs is a stalwart of business budgeting. I’m not just talking about costs related to tariffs or reduced consumer spending. More and more businesses are being affected by catastrophic natural disasters. 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

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

You might 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 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

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. 


This article was written by Jared Hecht from Forbes and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.


This article is not intended to provide tax, legal, accounting, financial, or other professional advice. Always consult a qualified professional about your personal situation.

The opinions expressed within this article is that of Jared Hecht and not that of M&T Bank, nor does M&T Bank endorse the opinions.


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