Streamline Your Small Business Budget During a Crisis

Start by evaluating your budget and cutting expenses to improve your cash flow.


Running a company is hard work, especially on the financial side. To succeed, you must operate with a smart small business budget.

The arrival of challenging times presents an opportunity to look over your organization's finances. When doing so, you can then make adjustments and plan for the unexpected. Here are some helpful tips for reviewing your cash flow and streamlining your budget.

Evaluate the Current Year's Costs
First, go over what you spent this year. What were your expenses? Look at what costs recur, as you need to plan for them now (since you'll know they'll persist in the future). Note which expenses were one-time costs, and brainstorm what new one-time purchases or investments you need to make i teh future, so you'll be prepared.

And remember: it's better to overestimate your expenses and underestimate your revenues and profits.

Eliminate Excess Expenses
You may need to reduce your business expenses in order to generate more profit. If you need to cut costs, start by looking at your company's discretionary spending. Be honest with yourself when it comes to cutting out what doesn't serve your business.

What were the bad purchasing decisions you made? What wasn't a good investment? You can also look at costs that don't provide a strong enough return on investment. Did your marketing campaign fail to perform? Did a product line not sell, and should it be cut to make room for new challenges?

Making mistakes is how you learn. Acknowledge any missteps, and make sure you cut out what's not working — or what you no longer need — from your budget. Doing so frees up cash flow that can be dedicated to more lucrative avenues in the near future.

How to Find Costs to Cut
Are you not sure where to begin? Here are some of the most common places where small business owners overspend, to help you get started:

  • Unmeasurable marketing initiatives based on guesswork and not research
  • Too much underutilized office space
  • Investments in superficial elements (instead of product and service quality)
  • Unnecessary consulting fees
  • Carrying too much insurance (or the wrong kind of policy)

If You Have Debt, Cut That Too
After you eliminate the expenses you can out of your budget, turn to your debt. If you took on debt to start or build your business, you want to include repayment on the borrowed funds in your small business budget. Paying off that debt as quickly as possible will give you more financial flexibility and save you money on interest charges. If you're not ready for that commitment just yet, making regular payments does open up cash flow for other business intiatives.

Don't Forget Your Personal Budget
You keep your business and personal finances separate on paper, and rightfully so. Remember to carefully manage your own money — and credit — so issues here don't bleed over to the business you want to build. Create a personal budget in addition to your professional one, and maintain a good credit score. This way, you can get the best interest rate and loan terms available, should you need to finance anything for your company.

Your small business budget is a financial guide that you can use throughout the year and during times of crisis to stay on the right track. Plan and build it now so you know where you stand.