What's the best way to budget for fluctuating expenses?

I have an XL spread sheet to follow cash flow. I record all transactions each month. This gives me an ongoing picture of cash flows. During the year all business have a slow period. this is where you should set your lifestyle cap.

This eliminates the struggle of cash flow in slow months. Over time you should build capital from more prosperous months. Capital that is accessible with fees or government interference.

Hi 

Thanks for the question. I suggest the following:

1. Keep on top of your bookkeeping including the reconciliations to ensure accuracy.

2. Run a cash flow report that includes your current bank balance. 

3. Create a business forecast that reflects trend in business revenue. Budget around it.

I can assist you in all of these areas. I charge a flat monthly rate depending on business volume.

Best

Christine

Review your business's  bank statements for seasonal peaks and valleys. Talk with your banker. 

They may be able to combine your business bank and business  line  of credit into one overdraft account for working capital. Easier to monitor your cash position when it's in one account. Deposits automatically reduce your overdraft and interest. 

Keep an active log of expenses in a spreadsheet, assigning month names to each column.  When you incur an expense, LOG IT daily before you forget it.  You'll be able to track expenses and see the timing of the large fluctuations, and thereby use that info as a model to budget for the future.

You should examine your expenses by quarter for each year.  Then go back and compare your budget to actual costs.  It is always best to be conservative on expenses and revenues.  I hope this helps!

If you can track your cash flow for the last two years and use that as a plan to project your current cash flow. This can be updated each year.

Stick to a Budget that has been well thought out. Don't go over it if you are pressured form marketing companies. Use them the following year if you must.

If you have information monthly about your expenses, you can better budget for the current and future years.  Review your revenue to get a better idea of when it is recognized and reflect your costs and expenses to the revenue.  If you do so, you should get a better idea of what your cash flow will look like and you can budget your outflow of cash to match the income you receive.

You need a good budget with a cash flow forecast.  Budgets are not just something that you do before the start of a new year and forget about.  Looking at monthly results compared to budget as well as compared to budget adjusted for actual sales is important to understand unexpected results and to make the best business decisions as a result.  I am very good at budgeting and do a very helpful monthly analysis to see how things are going compared to expectations.  Doing analysis each month can provide information a business owner needs to make "pro-active" decisions instead of "reactive" decisions.  Reach out to me if you would like to learn more.  Dan

Retail budgets are tricky as you are expending cash for inventory against projected sales. The best way to do this is by comparing month over month sales i,e., August 2019 against August 2018 & 2017. View this in a context of what similar stores are experiencing. Are you under, over or in line with the market. The rest of the budget like telephone, electric, etc take a reasonable increase over last year but apply it seasonally. Same with trade shows with a separate budget for each show and develop a cost benefit  analysis. Granted some shows you just need to go to for visibility. Ideally these are the less costly as there is not a direct cost benefit correlation.