A well-balanced budget is essential for any type of business. A business with a successfully operating budget will provide steady growth and stability. A sober budget is what keeps any business going. Absolutely no business could survive without proper money management. Even if you plan on hiring an accountant to do most of the work for you, basic money management skills are still a must. The small business owners will be required to assist the accountant in managing bank accounts, understanding tax forms, and reading bank statements. Also, it is important to have a good understanding of his business’s finances to be able to make the best possible financial decisions.

Cash Flow Projections

Cash flow is a simple equation. Cash Flow = Total Revenue – Total Expenses. This is key to keep a business going. Cash flow is the heart of any business. Even though it is essential for a small business, it is always changing and hard to predict. It can usually be estimated from past revenue and expenses.  A startup business’s cash flow often takes a while to be accurately predicted.

Why are Cash Flow Projections So Important?

Cash flow projections are important because they help determine the actual profit and how a business can benefit from it. Cashflow can either make or break a business. If a business’s budget doesn’t have the money to pay for basic expenses and spends money unreasonably, it will end up in debt.

Cash flow projections can also determine possible shortfalls in a business’s budget before they happen. This can allow a business to cut expenses to save It from going into debt.

Cashflow predictions are also good for ensuring the payment of employees. Cash flow forecasts will automatically take out the payment for each employee as an expense. This will ensure that each employee gets paid in full. All employees need to be paid on time and a  reasonable amount of money, as if they do not, they will quit their job and go work for another business.

Cash flow projections are also essential for ensuring that customers are making their payment paying by also allowing the business to keep a close eye on nonpaying customers. If you do not get a payment equivalent to the goods or services you provided to your customers, you will not have any profit and will likely go into debt.

Cashflow predictions allow also a business to apply for a loan by showing profitability. Paying off loans as quickly as possible is a priority in the eyes of many business owners. They do not want to be in debt, so they try to pay off their loan as quickly as possible. This is a clever tactic. However, several businesses need to take out a loan to upgrade business materials or pay off debt.


Bookkeeping is essential for keeping track of all of the records of a specific business. This can include bills, invoices, and taxes. It makes sure you keep all of this up-to-date, ensuring that you do not get behind. As a matter of fact, 25% of all businesses that have failed did so because of a lack of proper bookkeeping. They got behind on their expenses and went too deep into debt.

Bookkeeping Software

If you are planning on doing your own bookkeeping without an accountant’s help, you may want to invest in a bookkeeping software such as Quickbooks. This would especially be beneficial in the latter years of the business, as the business would have grown quite a bit by then.

Hiring an Accountant

If a business’s budget allows hiring an accountant, its owner might want to consider doing so. As a business owner, he will likely be busy with many other things. A good accountant will greatly reduce the business owner’s amount of stress and will also increase the budget’s likelihood to be correct, or more accurate, so to speak.

Before hiring an accountant, make sure your budget allows such an investment. A college-educated accountant usually costs somewhere between $10 and $20 per hour, often even more. They can be quite expensive, so the business must make sure it can afford the investment before hiring one. If it is affordable, the owner should seriously consider the investment, as it would be worthwhile in the long run.


In summary, there are several ways a business owner can successfully manage a small business’s budget. He should have a solid understanding of the business’s cash flow projection and estimate what the cash flow prediction should be for several different time periods (weekly, monthly, quarterly, yearly).  The business owner should either do the bookkeeping on his own or hire a bookkeeper to do the job for him.