As you look ahead for your small business in 2020 – whether there’s a plan to expand or just hold steady – creating and managing a budget that aligns with the new year can be important to your success.  

You may well be among the small businesses that fly without an official, formally documented budget – more than 60 percent small businesses operated without such for 2018, says a survey by Clutch, a ratings and reviews platform for the B2B services market.

You may want to reconsider. Operating without a budget, especially if your company is growing, your small business is missing the opportunity to plan for the long term. And you’re running the risk of financial issues next year, such as surprise expenses.

“Small business owners face a number of challenges everyday with their accounting, but creating a budget can help mitigate them,” says Clutch in its blog report on the survey. “Budgets provide guidance for short-term obstacles and long-term planning.”

That said, here are 4 tips from successful entrepreneurs and financial experts on how to ready a budget for your small business in 2020.

Plan for Some Flexibility.

Create ways to incorporate some flexibility in your budget as you plan for the year.

“Flexibility is going to be key in 2020,” says Fundera CEO Jared Hecht, who previously co-founded the group messaging service GroupMe, which was acquired first by Skype in 2011 then by Microsoft later that year.

In some contexts, making room for flexibility could be worth paying for, particularly given the talk about the possible economic turn in 2020, Hecht writes in a Forbes blog post. 

That may mean reducing your commitments to long-term deals in the next budget, even if you must sacrifice a discount. 

“Consider the big picture when you’re signing up for something that will incur long-term fixed costs, and decide whether you’d prefer the ability to scale down if needed,” Hecht says.

He cites subscription-based software solutions, such as customer relationship management software or email marketing software firms, etc., as examples of typical vendors offering a discount if you agree to a long-term contract. 

“But what happens if, in the middle of 2020, you find that you need to curtail costs and can no longer afford your deal? A huge part of your business’s infrastructure may come to a halt, slowing down profits or worse,” Hecht says.

See your budget for the critical tool it is.

A budget is a key part of developing a business and its growth goals, says Donna Conte, service area leader for Warren Averet, an accounting and advisory firm with offices across the southeast U.S.

“Without a budget, you have no measuring stick to evaluate your goals and performance,” Conte says in the Clutch blog post about the accounting survey.

Be realistic yet ambitious.

Your financial plan for your small business next year needs to be both attainable and ambitious.

“Don’t map out a budget that you can’t meet—but don’t underestimate the possibilities,” says a blog posted by the Harvard Business Review and excerpted from an HBR-published book Finance Basics.

To start, the blog says, list three to five goals that you hope to achieve in 2020, such as increasing your gross sales by x percent or reducing inventories by x percent by the end of the year. 

Then outline ideas on how you can achieve your goals in the new year – for example, identifying ways you’ll generate more revenue. 

The HVR blog advises small business owners to strategize ways to use past financial data to inform assumptions and ensure your budget will help meet your strategic goals.

Assess now if you’ll need financial help.

If you look ahead and see that you might need financial assistance to grow or support your business in 2020, plan now for that possibility.

The point is, says Fundera’s Hecht, you shouldn’t wait until your financials are in worse shape than they are now to apply for a business loan, line of credit or other business financing product.

In his blog for Fundera, a marketplace for small businesses to access loans, credit cards and other financial services, Hecht says the best time to apply for financing is when you don’t need it.

 “...because your cash flow is strong, or there aren’t any pressing, bank account-draining concerns to deal with. Banks and lenders love seeing a small business with strong and growing coffers, not those that are experiencing a downturn,” he writes.  

This type of planning could also help you lock in more affordable interest rates and terms that will pay dividends down the road, Hecht says.