Cash Flow Solutions

How to Plan Your Yearly Budget

Man writing down credit card number


2020 Edition


  1. Review Your 2019 Budget

Before you plan your 2020 budget, review your 2019 budget, if you had one. Go through it to determine how closely it matched your goals, projections, income and expenses. You can also see where your seasonal peaks and lulls occurred, helping you determine when you might see lulls in cash flow or spikes in the future. 

  1. Project Your Income and Expenses

Your income and expenses let you know how well your small business is performing. Startups are more likely to see red than black. As you budget each year, you should slowly be able to see the red decreasing, eventually turning black. Project your income by reviewing previous quarters to create a realistic estimate of how much revenue you plan to bring in 2019 Factor in any upcoming quarterly growth programs you plan to use to increase profits. Once your income is projected, move on to your expenses. First, review your fixed expenses. These are your expenses you know you will have each month or quarter, such as rent, payroll and insurance. Then, include fluctuating expenses for each month and quarter as well. This includes expenses such as increases in office supplies, inventory costs, employees and invoices. Finally, include any expenses that can happen unexpectedly. This includes broken equipment, natural disasters and store closures.

  1. Determine Your Priorities Document

What do you want to focus on the most this year for your small business? Are you looking to expand to a second location or an online store? Are you looking to grow your marketing strategies? Perhaps you want to hire more employees. Determining your top priorities helps you allocate funding toward those goals and highlights where to scale back to accommodate those goals. 

  1. Document Your New 2020 Budget

It’s important to review your budget each quarter or month to see how well your small business is sticking to it. As your business’s needs change, your budget will change. Reviewing your budget on a continuous basis can help you readjust where needed, find growth opportunities or make additional investments other areas of your small business. When looking at your budget, you might see some periods of highs and lows affecting your cash flow. There may also be times when you run into unexpected expenses that can cause a hiccup in your budget. During these times, you might need to rely on some extra funding to help tide you over.

Signs You Might Need Additional Funding

  • Covering Cash Flow
  • Purchasing Inventory
  • Upgrading or Replacing Equipment
  • Marketing Costs
  • Expanding Your Business
  • Hiring and Payroll

Keep Your Eye Out for Lending Scams 

Unfortunately, not all lenders are honest, and there are plenty of lenders looking to profit on a small business owner in need of some extra funding. Here’s how to avoid scammers. 

3 Tips for Finding a Safe Lender

  • Look for a physical address
  • Research third-party verification
  • Look for reviews from other business owners

3 Organizations to Report Lending Scams To

  • The Federal Trade Commission (FTC)
  • The National Fraud Information Center
  • ScamBusters

Lending scams aren’t the only threats to your financing options. Look at your business as a whole when you look for funding to get a better view of where you stand and what you could receive. 

Tips to Consider When Looking for Funding

  • Look at Your Options
    • Research all funding options available to your small business. Compare rates, application requirements, processing time and loan terms.
  • Start Building Business Credit
    • Establish good credit before taking out a small business loan. This can be done through applying for a business credit card and making all payments on time.
  • Focus on Your Business Plan
    • Your business plan is the map of your small business’s growth and success. Keep current with your financial projections, marketing strategies and development efforts. You can articulate your plan to lenders and investors to better secure your chances of funding.

6 Funding Options for Small Business Owners

  1. Traditional Loans
  2. Small Business Administration Loans
  3. Online Business Loans
  4. Crowdfunding
  5. Angel Investing
  6. Merchant Cash Advances

You can download the complete PDF version of this guide by clicking here.

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