For start-ups, business budgeting can be relatively new territory. The first few years are pivotal for any new company, so it’s crucial to have a plan. Without experience, it’s easy to make mistakes, but reputable research and business consulting will guide you on the path to success. Here are the most frequently made budgeting errors that you can avoid.

What Are Some Common Business Budgeting Mistakes?

1. Neglecting Financial Plans

It may not be the most exciting part of starting a business, but smart budgeting is key. Many start-ups fail to come up with detailed, well-thought-out financial plans.

These short- and long-term strategies will help you map out a realistic road to achieving your goals. If you are unsure of where to start, business consulting can help get you on the right track.

2. Miscalculating Expenses

Running a business requires you to keep track of a wide variety of expenses. When business owners miscalculate costs or lose track of expenditures, they might be underestimating how much they’re spending. Track all past, current, and upcoming expenses closely, including rent, marketing and advertising, materials, labor, utilities, and equipment.

3. Under-Pricing Products & Services

Offering sales and low prices can be tempting when starting out, especially when your competitors are able to attract customers with amazing deals. Remember that low prices are often a tactic for larger, more established companies. Start-ups are more likely to lose money, and the quality of the product or service may not be sustainable with the loss.

4. Losing Track of Cash Flow

When dealing with different suppliers, clients, and services to run the business, the cash flow may be inconsistent. You might be purchasing supplies now, but it could take weeks or months to see those costs pay off in the form of sales.

In the meantime, you’ll still need to pay the bills and rent. The budget should account for these gaps between paying for goods and supplies and selling to customers.

5. Underestimating Taxes

Taxes are a fact of life, and small businesses are not exempt. Many business owners make the critical error of underestimating how much they’ll owe. This can throw off the budget significantly, so you’ll want an accurate estimate, or even an overestimate, of what you’re liable to pay. Go over last year’s business tax return with a bookkeeper in detail. Knowing the tax rate and what you paid the year prior will help you determine the net profits with better accuracy.

Building a financial plan is no small feat, and many small businesses struggle to get off the ground. If you need help creating your strategy, the business consulting experts at Joe Heard, CPA, can help. Located in Checotah, OK, their accountants provide excellent financial advice and services for families and businesses alike, from tax filing and estate planning to bookkeeping and business transformation. To schedule a free consultation, call (918) 473-1492. Learn more about their business consulting services online.