It’s no secret that we’re going through a volatile time and small businesses are feeling the sharp end of it. The key to surviving and – dare I say it – even thriving in the coming months is to make the most of your resources.

Given that the pandemic has cost the average small business over £11,000 in lost takings and extra expenses, having a budget and optimizing it is essential. Especially when, as the pandemic hit, most businesses only had enough spare cash on hand to last two to eight weeks.

So, moving forward, how can business leaders ensure that every pound of their budget is well spent? Here are eight tips to help you get started.

1. Align with your goals

Your budget is unique to your business. Therefore, you should begin by understanding your short, medium, and long-term goals and how your budget aligns with this. This will help you set the priorities in your budget and what can be scaled back if needed. It also ensures that your investments line-up with your strategy, which makes it easier to add value to your bottom-line.

2. Identify risks

It is vital to understand the risks of your organization and its industry, for instance, if it is particularly seasonal or dependent on another industry. It’s a good idea to consider any legislative changes that may impact your business, track sectors that affect your own, analyze any productivity threats – and then factor in some level of the unknown. This will help you plan your spending and also have contingency plans and spare budget if the worst were to happen.

3. Build the right budget team

Building a budget isn’t a one-person job. Involve individuals who will be held accountable for your budget. Naturally, this will include members of finance and your management team and you can also consider other employees to bring fresh perspectives. Your delivery drivers, for instance, will have unique insights into your vehicle maintenance and investment needs. Your front-of-house staff can offer advice on what is, and isn’t, working in your retail locations.

4. Focus on your niche

Your business has something that it’s really good at and this is likely its core product or service. When budgets are tight and the economy is tough, hone in on this first before spending your efforts on diversifying your offering. Focus on the products and services that you know will perform the best – ideally finding multiple revenue streams (like offering a VIP service or a subscription) to give you more financial flexibility.

5. Automate and delegate

Your time is precious (and more so during a crisis). To maximize your energy, be prepared to delegate some of your low-level, time-stealing tasks to focus on high-level strategy. Also, consider what automated solutions can free up time for yourself and your employees. This reserves your team’s efforts for tasks that will have the biggest possible impact (and returns) for your business.

6. Invest in retaining customers

It costs five times more to attract a new customer compared to retaining an existing one. To maximize your budget, therefore, you should look at building long-term relationships with your customers so they return time and time again. Loyalty or VIP schemes and re-engaging past customers with tips, articles, discounts, and exclusive product access are just some of the tactics you can try.

7. Measure your returns

What’s measured can be managed. To have a grip on your budget, you need to have the right performance indicators that can forewarn you if your returns are lower than expected, or if plans are going astray. It helps you keep tabs on the financial health of your business. For these indicators to be effective, make sure they are well-defined, clearly measurable, and communicated to the key stakeholders in your organization.

8. Don’t be afraid to change

If your performance indicators do show that your strategy needs shifting, then don’t be afraid to amend your budget during the year. A budget isn’t a one-off creation. It evolves as your business and market changes and, given the rapid transformations happening today, it needs to adjust quickly. If you wait until year-end to compare your actual results to the budget, you’ll be too far behind to make meaningful adjustments and maximize returns.

Some ways you can rejig your budget during the year include renegotiating vendor agreements if needed. If, for example, your headcount drops and you don’t need as many licenses, see if your expenditure for this can decrease. It’s also worth looking at money comparison sites to find the best deals for money transfers, business loans, credit card, and other financial services.

Many options to optimize

As you can see, there are many ways to make the most of your budget. Looking at your investments should be a continuous thing, done throughout the year to ensure the maximum returns for your business. Pick one or two areas to look at each month and it won’t be a huge undertaking, but it could lead to significant results.