This is a guest post written by Maricel Tabalba.

Financial responsibility is critical to the successful operation of any small business, so establishing a budget is a sensible step for any entrepreneur to take. By implementing a well-thought out budget now, you'll be able to avoid future problems while putting your coaching business on a firm footing. Remember to adhere to a few common sense rules so that your money-related plans remain realistic and useful to you both now and going forward.

1. Overestimate expenses

No matter how foresighted you try to be, unexpected costs will undoubtedly present themselves. It's far better to add a buffer of 10 or 20 % to your projected expenses rather than optimistically hoping that all expenditures will fall in line with what you estimated they will be. If bills come in lower than expected, then this is fine: You'll have some extra money to play with, which is far better than the other way around.

2. Keep an eye on your sales cycle

Very few businesses have steady revenues and expenses across all months of the calendar. Be sure to account for seasonal fluctuations when drafting your budget. Otherwise, the numbers you write down might just turn into imaginative works of fiction. Slow periods are ideal times to explore new marketing strategies because you'll have some extra time available and you won't run the risk of overburdening yourself during a high-volume season.

3. Time is money

As scarce as money might seem to any aspiring businessperson, there's one resource that may be in even shorter supply—Time. You ought to account for your hours just as carefully and prudently as you do for your dollars and cents. You can offload repetitive or non-creative tasks onto the shoulders of other personnel rather than attempting to do them yourself. If hiring a full-time employee wouldn't be cost-effective, you can still engage a freelancer or third-party firm to perform the necessary chores for you.

4. Seek out lines of credit

Lines of credit can be invaluable tools for giving yourself some leeway during periods of low or negative cash flow. Even if you never use them, they're great to keep in reserve just in case something unplanned comes up. There's a secondary benefit to these financial arrangements as well. When searching for loans to expand your company, a history of wise and responsible use of credit may allow you to secure lower interest rates and more favorable repayment terms.

5. Keep your budget updated

A yearly budget just isn't enough in the fast-paced world of small business. As financial results come in, be prepared to revise your budget monthly. One of the advantages that tiny enterprises have over their larger competitors is the ability to change direction quickly and respond to new market conditions. If you've handicapped yourself by remaining tied to an out-of-date budget, then you'll be throwing away this important competitive edge.

6. Categorize expenses

Break down your projected expenditures into essential and nonessential groups. Bills like rent and payroll can't really be reduced without making major changes to your organization. However, other items, such as advertising and office furniture, can often be easily adjusted based on your recent financial performance. By identifying what your non-essential expenses are, you'll be gathering information that will be instrumental in cost-cutting, which will free up cash for more vital functions.

7. Monitor your debt load

While debt can be a wonderful servant, it also has the potential to be an overbearing, tyrannical master. The interest payments on debt over time can accumulate until they exceed the principal amount. Rather than paying for the use of the money twice or three times over, endeavor to retire your debt obligations as soon as is practicable. You'll thereby reduce their impact on the long-term financial well-being of your corporation.

Proper budgeting can help you take your small business to the next level of growth and profitability. Much as with any other aspect of your operation, you'll stand to achieve your goals if you focus on the hard facts rather than letting your imagination or wishful thinking get the better of you. With discipline, sagacity and just a little bit of luck, you'll reap rewards that far exceed the effort you put into the budgeting process.

About Marical Tabalba

Maricel Tabalba is a freelance contributor for Credit.com who is interested in writing about personal finance advice for Millennials and college students. She earned her Bachelor of Arts in English with a minor in Communication from the University of Illinois at Chicago.

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