The first month of 2017 is under our belts, and a majority of businesses have set their budgets for the year. For many small businesses, however, organizing finances can be an extra challenge - especially if there are expensive purchases ahead.
With tax season, new hires, and inevitable miscellaneous spending in the upcoming months, all of those dollar signs can be overwhelming. Buying big ticket items is a daunting task, particularly on a small business budget.
Making a large purchase is a future investment for your company. Fortunately, many of these items (equipment, vehicles, electronics), although costly, can last more than one year.
When planning out your next big purchase, keep these things in mind:
Determine your needs versus your wants. An expensive item can be justified by how essential it will be to your business. Would you be able to run your business without this purchase?
Do your research. Along with thinking of your needs, do your homework to see which product or brand best suits your business. Instead of impulsively diving into a pressured purchase, search for trusted reviews and compare prices.
If possible, plan ahead. Small business budgets have little room for error, and spending more than you need to on a big purchase could harm your company. Look over your past financial history to find patterns in your expenses and incomes to plan for the best time to buy your large item.
Ask, “Will this item make me money?” Understanding how the new item will fit into your cash flow (the money going in and out of your company over a period of time) is key. Comparing the cost of the item to the potential revenue it could bring in should be factored into your budget as well.
Know your limits. Making a big purchase is a big decision. How much are you willing to put into the item? Consider all of the risks before committing, and establish how much you are willing to spend.
With business expenses in mind, your personal or family finances may come into play as well. Planning your personal finances for the year is important, but can be more difficult if you also have a business to run. Don’t know where to start? Check out BBB’s infographic below for tips:
Business owners and consumers can also visit BBB’s tax resource microsite for tax tips, resources and a list of trusted tax preparers.