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The first quarter of 2018 is almost over, which means it’s time to start reviewing your budget. Reviewing your budget on a quarterly, or even monthly, basis helps you understand where your startup needs improvements, where to scale back and where to invest. It also helps you better budget at the end of the year, as you’ve kept a thorough record of your expenses and revenue.
Here’s how to review your startup’s budget at the end of Q1.
Reviewing your budget
Post all transactions
Ensure all your transactions from Q1 are included in your budget report. This includes invoices, receipts, income, bank statements, expenses and more. See how much you’ve allocated to various operational expenses to find where you exceeded or fell short of your budget.
If you find yourself spending too much on inventory and noticed sales haven’t caught up, scale back on those products. It’s important to project any future transactions, as well.
Let’s say you own a retail store: research what clothing will trend in the spring and summer months and allocate funding toward that inventory, scaling back where need be.
Look at the red
The red and black give you an accurate view of where your business stands. If you’re seeing much more red than black, readjust your budget for Q2. See what projects or initiatives didn’t work and where you might need improvements.
However, if you’ve remained stagnant, strategize new initiatives or improve ongoing, positive initiatives for the next quarter. Reviewing the red earlier on in the year can help decrease overspending throughout the year, something that could potentially close your startup.
Review previous quarterly budgets
It’s important to review your Q1 budgets from previous years to see if there are any trends, improvements or declines. Is January a busy or slow month for your business? Are there any successful projects you tried in the past during this quarter that you can try again?
Your previous budgets can be a guideline of where you need to focus. If you’ve noticed a decline or improvement from the previous year, find the cause. If you’re performing above seasonal trends, it’s an indicator that you’re taking the right steps.
After reviewing your budget, go back through a few more times to ensure everything is input correctly. Double and triple check the math to get the accurate picture of your finances.
How to cut back
If you’ve spent more than you’ve budgeted for, look at areas in which you can scale back and where you might be able to reallocate other funds. Double check each amount in detail.
Are you spending more than you should be on inventory? Have you spent too much money on boosted social media posts? Look at what strategies haven’t panned out and cut your losses. Re-evaluate your needs and see what adjustments you can make to help stay on target with your budget.
What to do with extra funds
If you find yourself below your estimated Q1 spend, don’t make any rash decisions just yet. First, see if there are any areas in which you may have made unnecessary cutbacks. From there, see if you can invest or allocate the extra funds to other expenses. Perhaps you can order more inventory of products you find are growing in demand. You might also be able to put some of the extra funds into your startup’s savings account to invest in the future expansion of your business.
Reviewing your budget on a quarterly basis gives you a better understanding of company’s standing throughout the year. By reviewing your budget, you’ll be able to address potential issues, see which strategies work best for your business and take a chance on opportunities you may have otherwise missed out on.