Whether your business is just starting or has been around for a while, budgeting is an essential part of keeping things running smoothly. A budget allows you to track your income and expenses so you can see where your money is going and make adjustments as needed. Having a budget also lets owners decide if it’s time to invest in personnel, like a finance assistant or a VA, who will help you focus on income-generating activities.
In a 2021 survey by Clutch, 54% of business owners said that they had an official budget, which means 46% of surveyed organizations didn’t have a documented plan for their spending. Although creating a budget can be time-consuming at the outset, having no budget produces more problems for business owners in the long run.
Why Small Business Budgeting is a Must
If you're not used to budgeting, it can seem like a lot of work. But once you get the hang of it, it's not that difficult. What's more, the benefits are well worth the effort. Here are four reasons why small business budgeting is so important.
Helps you keep track of finances
When you're running a small business, there's a lot to keep track of. From inventory and expenses to employee salaries and marketing costs, it's easy to let things slip through the cracks. A budget helps you stay organized and on top of your finances so you can avoid any costly surprises down the road.
Allows you to plan for unexpected expenses
No matter how well you plan, there will always be unexpected expenses that come up from time to time. A budget gives you a cushion to cover these costs without putting your business in financial jeopardy.
Enables you to spend on the right things
It's easy to overspend when you're not keeping track of where your money is going. A budget forces you to take a closer look at your spending habits and make decisions based on what's best for your business, rather than what's easiest at the moment.
Keeps you accountable
Budgeting is not only important for financial reasons, but also for accountability purposes. Having a budget in place holds you and your employees accountable for spending wisely and sticking to the plan. This can help prevent employees from overspending on personal items or making unnecessary purchases that could put your business in debt.
Serves as a benchmark for success
One way to measure how well a team works is by monitoring how well they stick to their budget. A business' goals are tied to how much money it allocates per team. If a unit spends less than the amount assigned to it and still hits project milestones, you can consider it cost-effective, and therefore successful. It means the team can carry out its function without straining the company's resources.
Where Small Business Budgeting Helps
Now that you know the importance of small business budgeting, let's take a look at some examples of where it can help.
If you're selling products or services, it's important to set prices that will cover your costs and generate enough profit to keep your business afloat. A budget can help you determine how much to charge for your goods and services so you can make a reasonable profit without pricing yourself out of the market.
If you have inventory on hand, it's important to track how much you have and when you need to replenish it. A budget can help you keep tabs on your inventory levels so you don't run out of stock or end up with too much of it.
From rent and utilities to marketing and advertising, there are a lot of expenses that go into running a small business. A budget can help you keep track of where your money is going so you can cut costs where necessary. Budgeting also helps you figure out whether you should hire in-house employees or hire outsourced help like a virtual marketing or finance assistant.
Planning for Growth
If you're planning to expand your business, a budget can help you map out the costs and ensure that you have the financial resources in place to make it happen. Budgeting also prevents you from seeing your business through rose-tinted glasses and enables you to be more strategic about when to spend and when to be conservative.
If you're looking for investors, a well-managed budget is essential to convincing them that you're serious about your business and have a plan for success.
Small business budgeting can be extremely helpful in a variety of ways. By taking the time to create a budget and stick to it, you'll be putting your business on the path to success. With a budget, you can take more specific steps in planning your day-to-day operations.
Budgeting: Just the Start of Better Operations
Achieving all of these—tracking expenses, managing inventory, and the like—takes a bit of work. These activities consist of time-consuming tasks, ones that take away from other responsibilities that business owners must fulfill.
When you're overwhelmed by these tedious activities and are getting nowhere with higher-level, mission-critical tasks, you know it's time to get a finance assistant.
Should You Hire a Finance Assistant?
A finance assistant can take care of the day-to-day money matters of your business, giving you more time to focus on its growth.
Having a finance assistant, especially a virtual one, saves you money in the long run. A finance assistant can help you keep track of your expenses, prevent you from overspending, and find ways to cut costs so you can save even more money.
In short, a finance assistant is an important member of any small business team. If you're not already using one, now is the time to consider doing so!
Skills and Qualities of a Finance Assistant
When hiring a virtual finance assistant (or an in-person one, for that matter), you need to be sure you're getting someone who can do the job. You'd want to get a finance VA who displays the skills and qualities from the list below:
- Knowledge of accounting practices
- Aptitude in mathematical operations
- Good communication skills
- Familiar with accounting software like QuickBooks
- Proficient with Google Sheets, Excel, and similar software
- Adept at using other apps in GSuite/Microsoft Office
- Can work independently or with a team
- Good time management skills
While some of these requirements are self-explanatory, like knowing how to use accounting software and spreadsheets, others might not appear as things a finance VA must exhibit on the job. Take, for instance, good communication skills.
A finance assistant needs to be great at written or verbal communication because a significant chunk of their tasks involves relaying information to others, whether through a presentation or a report. They must also be detail-oriented since accounting and bookkeeping involve keeping figures and numbers accurate.
What to Delegate to A Finance Assistant
A significant barrier to hiring a virtual assistant for finance is that some company owners don't know how hiring one helps them to grow their business. Some business leaders need inspiration to help them see how they can leverage their virtual finance assistant.
Below are examples of financial administrative tasks and accounting support tasks you can assign to a VA who specializes in finance.
- Create and maintain balance sheets
- Assist in developing budget proposals
- Outline and prepare cost proposal narratives
- Prepare an organization's tax documents
- Keep track of accounts payable and receivable
- Create monthly financial reports for projects
- Create a cost analysis report
- Research costing needed for a project or proposal
- Assist in preparing monthly budget reports
- Track contract's period of performance
- Monitor due dates of deliverables and financial reports
- Prepare subcontracts and agreements
This list is non-exhaustive; your VA may be able to perform other tasks related to bookkeeping and accounting. Similarly, your assistant might only be familiar with some of the tasks on this list and might need training to be able to complete others.
Should You Hire a Virtual Finance Assistant?
Now that you know what a finance assistant can do for your business and what skills and qualities to look for in one, it's time to decide whether you should hire a virtual finance assistant or not.
Here are some factors to consider:
- Size of business – If you have a small business with a limited number of employees, it might be more cost-effective to hire a VA than to add another full-time staff member.
- Complexity of finances – If your business has a lot of transactions and you need help keeping track of them all, then hiring a VA is a good idea.
- Organization’s budget – Hiring a VA is generally more affordable than hiring an in-person finance assistant. You also have the option to hire a part-time VA if you're on a tight budget.
- Company location – If your business is based in a remote location, it might be difficult to find an in-person finance assistant. In this case, hiring a VA is the way to go.
Hire a Virtual Finance Assistant Today
A budget is essential for any business, large or small. By tracking your income and expenses, you can see where your money is going and make adjustments as needed. This information also helps you set realistic goals and makes informed decisions about how to grow your business.
Fortunately, there are many tools and resources available to help you create and maintain a budget.
Wing’s virtual finance assistants can take care of many of the tedious tasks associated with budgeting so that you can focus on what’s important – running your business.
Find the best specialized VAs at Wing today!
Aya is Wing Assistant’s blog manager. When she’s not wrangling content briefs, editing article drafts and handling on-page SEO, she is crafting messages for Wing’s other communication materials. Aya writes about SaaS startups, marketing for startups, search engine optimization, and pop culture.