How to manage budgets for your business

Let’s be honest: creating a budget for your business can feel overwhelming. Where to even start? How do you forecast expenses, set revenue targets, and make sure you’re not overspending? The good news is, it doesn’t have to be complicated and you don’t have to do it alone. With Budget Management, Guided Buying, Amazon Business Analytics, and Approvals, you can build a strong financial foundation that aligns with your goals and sets your business up for growth. In this post, we’ll walk you through the steps to create a detailed budget for your business and show you how Budget Management can help you stay on track.

Step 1:  Forecast your expenses and set budgets against your spend

The first step in creating a budget is understanding where your money is going. You can start by listing all your fixed expenses like rent, utilities, and salaries and variable expenses like supplies, marketing, and travel. Don’t forget to include occasional costs, like equipment upgrades or seasonal inventory. Pro tip: You can use Amazon Business Analytics to view and track your spend on business supplies and easily pull a report to find out exactly how much you’re buying on specific categories. Once you have an idea on where your money is going, this is where Budget Management comes in handy. You can allocate budgets to team members who are buying for your business, giving buyers the freedom to make purchases while you maintain control. If you’re adding new users, Budget Management has a new proactive budgeting feature that helps you set allocation rules, automatically assigning budgets to new users.  You can also use Guided Buying and Approvals to create guardrails and set spending thresholds for different categories. If you know you only want to spend $500 a month on office supplies, you can set that limit and easily track spend against the category.

Step 2: Set guardrails with Guided Buying and Approvals

Once you have your budgets created, you can streamline the process even further with our Guided Buying and Approvals tools. Guided Buying helps you to set preferences regarding the types of products and supplies, allowing you to remain in control of spend across your business when you have multiple buyers purchasing on your account. Set custom rules based on purchase amounts, product types, or preferred suppliers. Approvals adds an approval workflow to the buying policy so if an employee tries to buy something outside the set budget, it’ll automatically trigger an approval process. This keeps your spending in check and ensures every purchase supports your overall financial plan. When you combine Approvals with Budget Management you can set spending limits for different categories and let Approvals automatically enforce those limits. This way, you can focus on growing your business instead of monitoring every purchase.

Step 3: Adjust your budgets as your business evolves

A budget isn’t always a one-and-done deal. As your business grows your budgets should evolve with them. Regularly review your spending and revenue to help stay on track. If you notice you’re overspending in one area, adjust your budget or find ways to cut costs. With Budget Management, you can monitor your spending in real time with Amazon Business Analytics and make adjustments on the fly. For example, if you realize you’re under budget in one category, you can reallocate those funds to another area that may need it.

Step 4: Focus on growth and stability

The ultimate goal of setting budgets is to help your business grow while maintaining financial stability. As a small business owner, you know the ins and outs of your business and have the best understanding of your cash flow. Tools like Budget Management and Approvals can be incredibly impactful when manage tedious day-to-day tasks so that you can shift your focus back to the activities that fuel your business and drive profitability.