Video transcript:

Budgeting:

The most important aspects of running a business include planning, promotion, finances, and managing customers. First, managing the business’s finances is key to meeting selling and manufacturing goals. A business budget helps businesses make projections for the future which inform relevant business decisions. Using accounting software can ease this process and help you determine gross profit, net income, and net operating income. Online budgeting templates will also help you track your finances more smoothly and decide how much to reinvest, when to limit expenses, and when you will become profitable.

The first step is to look into typical costs for your type of business to find an estimate for your costs and revenue. Then, find out how much money enters your business each month for at least a year by adding all of your revenue sources. This will allow you to look for patterns in revenue like seasonal changes and busier vs. lighter sales months. Making such predictions informs projections of how much to spend each month. Fixed costs must be subtracted each month to show how much you’re actually making after all of the business’s expenses. Examples of fixed costs are taxes, salaries, and rent. Then, subtract variable costs that change depending on how much the business produces such as materials or hourly wages. These variable costs can be reduced in months that are expected to have fewer sales.

Extra money must also be saved for unexpected costs rather than spending all extra revenue on variable expenses. Such costs could include replaced equipment or sudden damages. Revenue minus all expenses will equal profit if positive which should be calculated for each month. This is known as net income. If net income is not positive, the business is at a loss for the month. This should be avoided and budget adjustments can be made to remedy this for future months. Particularly for small businesses, not every month or year will return a profit. You will want to make sure you are not spending more than you have the means to. This means only expanding or upgrading aspects of your business when you are financially ready which will be roughly indicated by your business budget. You can set up strategies to meet your earning and spending goals at set intervals. Make sure your predictions match your actual earning and spending each month in order to fine-tune future projections and inform business decisions.

Key business factors:

One of the most important things for small businesses is to have a unique point that makes you stand out from other businesses. This could be a novel product, introducing something new to your area, being closer to customers, or selling at a lower price than competitors. This is key because it ensures that customers will buy from you instead of other businesses. With a unique idea, you must have a plan to execute your idea. Figure out if you need any permits or special supplies to sell your product. Who are the key players in your business pipeline? Map out all of the steps to get your business up and running including funding, employees, materials, facilities to operate from, advertising, etc. Much of this information can come from your business plan. Also make sure to include plans for expansion, overall business goals, and when you will be profiting. Knowing your competitors is equally as important as getting your business off the ground because competitors are targeting the same customers as you are.

To get ahead, make sure you are offering something unique over competitors in your area. Take a look at their website, try their product, and monitor how they market their business. Marketing helps small businesses in particular by making customers aware of new products and familiarizing them with the brand. Part of good marketing is customer service. This means responding to customer inquiries promptly and with care. It also includes making the website easy to navigate and being transparent with customers. Another important aspect of running a business is keeping record of everything to be referred back to later. This keeps the business organized and knowledgeable.

Another key point is building a team around you to make up for the areas you’re inexperienced in and keep the business running smoothly. This includes networking to make connections that can be valuable down the line. Next, we have the funds required to start the business. These can come from a variety of sources depending on your situation including personal funds, bank loans, investment companies, microgrants, etc. You will want to look into grants aimed at helping small businesses launch. Lastly, starting a small business is a challenging task that requires bravery and ambition. The key to success is perseverance even in hard times.