You could have a truly revolutionary business idea, or some of the most creative and innovative marketing in the world, but all of that isn’t going to count for much if it isn’t backed up by a solid, long-term financial strategy. When you’re first getting into the details of your long-term business plan, make sure you’re not making any of these major budgetary blunders…
Inflating your Projections
Far too many businesses have hurt themselves by over-promising and under-delivering. You wouldn’t be the first to make this mistake, and you certainly wouldn’t be the last! It’s pretty easy for investors to get fooled by financial figures in the short-term, but in the end those numbers will always catch up with you. Yes, I know that if you’re brutally honest with your projections, it can take a lot longer to source the kind of funding you need to really take your business places. However, taking your time, and putting more work into the finer points of your pitch is always worth it. When that money does come through, it will be honest money, and will allow you to pursue a business plan that will remain realistic and manageable for years to come.
Not Expecting the Unexpected
While planning for the dependable things that the future holds for your business as nothing else can free up a lot of capital, there are various unexpected mishaps that can creep up on your business, and cause an immediate, urgent need for money. Property damage or loss, an employee being injured, a major security breach can all happen to your firm, just as it happens to countless other businesses on a fairly regular basis. When you’re drawing up your budget for the year ahead, remember to leave an emergency cash buffer which you can tap into if and when you need it. This can be used to cover things like short-term property repairs, graffiti removal, transport hire, outsourcing an unexpected influx of work to freelancers, and so on. Full-blown business emergencies are rare, but you should always have a plan for them.
Poor Management of the Marketing Calendar
Seen as marketing leads to sales, you might think that it’s pretty difficult to mismanage the money you’re investing in it. However, a lot of business budgets treat marketing costs as a percentage of sales in a single sales period. To make sure it’s truly effective, you need to ensure your marketing campaign is initiated at least one period before any big sales can be counted on. When you think about the other out-of-pocket costs that are going to come with a marketing campaign, a well-managed marketing budget is essential for your future success. Fail to budget the necessary costs in a well-thought-out time frame, and you’ll be under-utilizing your finances, holding yourself back from those big sales targets, and increasing the risk for over-spending later in the year.
Moving forward, be sure to keep these mistakes in mind. If you’ve formulated a great vision for your business, don’t let it crumble under a poorly managed budget!