The government’s pro-business stance has seen many aspiring local entrepreneurs set up new business ventures in Singapore. However, there are inherent risks in starting any new businesses. Without proper budgeting, startups may find themselves struggling in the long run.
Business expenditures will only continue to rise in the foreseeable future. Any new entrepreneurs have to carefully plan their budget to stay on top of their finances. To help you along, check out these 4 essential budgeting tips for new business ventures to ensure you don’t overspend.
1. List down the essentials
Start by listing down what is essential for your new business. It is easy for your expenditure to pile up with unnecessary purchases. Identifying the essentials allows you to determine which items you have to procure and which items can be put on the backburner.
Depending on the services you provide, you can even consider going digital and save on office rent. A website or online store may suffice during your business’s initial phase, allowing you to redirect the money you saved to other more pressing concerns. You can consider renting an office space once your client base starts to expand, and you are more confident in taking on the additional cost.
2. Plan for emergencies in your budget
A startup is likely to have limited resources available for maneuvering. However, there may be unforeseen circumstances that forces you to dip into your budget. When such situations occur, you will have to review your finances and evaluate which expenditure can be remove to accommodate this sudden cost.
You may want to consider cheaper alternatives to keep your expenditures low in anticipation of such situations. With extensive research, you are likely to find cost-effective options for your current recurring costs. For example, if you need software applications that require a licensing fee for commercial use, there may be open-source alternatives available for free.
3. Be conservative in your projected revenue and spending
There have been examples of companies overestimating their projected revenues and increasing their cost as a result. When revenues drop below the forecasted amount, these companies find themselves struggling to sustain their increased cost.
It is critical to ensure realistic forecasting of revenue and keeping track of the figures when planning your budget. It may be sensible to be more conservative in your revenue estimates. A startup is unlikely to have an established client base to generate steady revenue. Aim to base your projections within your company’s current capability and ensure proper structures and plans are in place to reach your goals.
Understanding your projected revenue gives you a better sense of your company’s financial health. Knowing your company’s finances can help you plan your budget better and ensure you do not overspend.
4. Factor time into your budget planning
It is easy to neglect time as a factor when planning your budget. As the saying goes, time is money. Underestimating your time spent could indirectly lead to increased costs. Review your day-to-day operations and identify time-consuming activities that can be reduced or eliminated.
Consider outsourcing your non-essential functions such as accounting to specialised firms so you can focus on your core services and expand your business. We at Ackenting Group pride ourselves as one of the best audit firms in Singapore. Allow us to offer our audit services to ensure you receive timely and accurate financial reports. A well-documented report can help you stay on top of your finances and better plan your budget for the following financial year.
With enough practice, you will soon get to grips with planning your business budget. Having an effective budget in place allows you to consistently meet your sales target and divert resources to what is necessary to avoid overspending – so you can maintain optimal cash flow and ensure your new business venture takes off smoothly.
If you require any assistance on accounting services, feel free to drop us an email at firstname.lastname@example.org or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.