Balance Between Spending and Saving

The balance between spending and saving is a delicate one. Balancing that in a small business can be even tougher than for a family. Knowing how to prioritize is key. How do you need to grow and how can you be best financially prepared?

What Is Your Current Situation? Balance Between Spending and Saving

First things first, make sure your accounting and banking records are entered and up to date (if you need help with that, give us a call!) You can’t possibly know what your next move should be until you know where you are at. Look at it all – the good, the bad, the ugly! This will help you see where you are at with cash flow and will help to determine the best move!

Now It’s Time To Make Some Plans – The Balance Between Spending and Saving

The time frame is totally up to you, but I think it is good to look 6 months ahead and then 2 years ahead. A different time frame may work better for your business, so choose what works. How competitive is your business and do you see your top line staying the same or growing within your time frame? Are you comfortable with where you are? Could you manage through a downtime or an emergency? Ask yourself the tough questions!

Determine How Much You Can Save – The Balance Between Spending and Saving

Here are some different “ways” to save once you have your expenses paid for:

• Transfer a percentage of top-line sales – such as 5%, on a monthly basis
• Each time you complete payroll, determine an amount that is also transferred to savings
• Run a promotion or sale with the goals of contributing all the profit to your savings account
• Cut back on a particular expense (such as ordering in food) and put the money in your savings instead

In Closing…

Finding the balance between spending and saving is a critical key to success for your small business. You savings are a backup plan for a rainy day and spending can be a way you grow and improve your small business. They are both important!