It’s safe to say that the COVID-19 pandemic has proved to us that things can fall apart at any time and without good stability, you may never rise up again.
For instance, in Kenya already a good percentage of businesses have closed shop while others survived by a whisker through the tough economic period. We’ve had schools close down permanently due to the implications that were brought about by the pandemic.
While other businesses have skyrocketed through the crisis, it remains a greater lesson for every business to consider in their future planning.
In Kenya alone, we had over 124 private schools that closed down completely due to COVID-19 not because they never budgeted for such economic times but their budget couldn’t sustain them beyond the new stretch.
So how do you budget for such economic times upfront? here are a few ways that can guide you to budget for your business through tough times. They include:
Identify financial goals
As you plan for your company goals , i dentify what you want for your business both short term and long term. This should include customer data , your cashflow, existing company debts before you finally come up with a budget.
Stick to your budget and update it dedicatedly
Budgets work out perfect when you stick to them. For instamce if you budget to use $20000 in one quarter, make sure you stick to that amount and keep on updating as soon as you spoend it. This helps you keep on track and focus on the things that are more important.
For instance, if your sales go down, you can look at your daily expenses and cut expenses based the urgency of the project.
Set strategic guidelines for financial focus
Strategic guidelines are like company core values and they help us make better decisions in times of crisis. If you put down strategic plans and focus on them, your business will be better equipped to allocate financial resources in line with the needs of your business.
Budget based on multiple forecasts
While budgeting for your business, forecast for meeting all your goals, exceeding them and the chances of failing short of the goals. This is because , there are so many uncertainities in businesses owing to the nature of the market.
However, here are some best practises while forecasting for your business.
- identify a timeframe for which you are budgeting for.
- Analyze the fixed or variable costs you can reduce, eliminate or avoid in order to achieve your set goals
- Project how much profit, site visitors you need to achieve your goals, and make conclusions based on that.
- Consider all other short term but necessary demands that your business may need from time to time.
Embrace change
So many things can happen over a very short period of time and despite a budget in place. It may never be enough. In such times, like now, consider embracing the new normal when things don’t work out as expected adjust to a more accommodative budget that works for you.
Ensure all departments collaborate and are aligned to projections for the company so that if there is a need to shift budgets, it becomes a smooth process.
The final thing is, most businesses focus on growth and pursue any kind of lucrative opportunities that come their way. Most importantly, if you stay true to your cause growth will find you regardless. Take time to research on new ventures and ensure you only pick those that match your cause. That way, you will be able to work on the same budget,.