How to Create a Small Business Budget
Small business budgeting ~ how can I do it?
It can be challenging to know how to start creating a small business budget that works for you. What should you include in the budget, and how to you make sure it suits you and your business goals? Read on for our top tips and strategies for creating a great business budget plan that will work for you!
1. Review Your Income
Before you can even start creating and determining your budget, you need to get very clear on your income. It’s important to take some time to review a number of different figures and details. For example, make sure that you are clear on your sales figures, your regular income as well as any other additional revenue sources.
This is also a very good way to be sure that you know exactly how much the business is actually bringing in. It can be a real eye opener sometimes, so make sure you spend the time actually doing this step.
2. Outline Fixed Costs
Okay, now that you’re really clear on your income, it’s time to review a second, just as vital and necessary step. It’s time to look at your fixed costs, or fixed expenses. These are expenses that have a fixed, monthly price that does not change or fluctuate. For example, your rent or your internet plan would be fixed expenses.
Review these bills and determine exactly how much you need to pay each month. It can be helpful to enlist the help of your bookkeeper at this point, just to make sure you’ve found all the correct and relevant bills, and that your income calculations were correct!
3. Estimate Variable Expenses
Variable expenses tend to be a bit different from fixed expenses, and they are a bit harder to budget for. These are expenses that fluctuate each month. For example, you might be able to estimate your electricity bill, but there is no guarantee that it will be exactly what you thought when it arrives.
Where possible, try to estimate a baseline figure for these expenses and make a note in your budget. Be aware of the fact that these expenses may be more than expected and make allowances for that within your budget.
When you’re looking at variable expenses, it might also be wise to consider potential once-off purchases that you might need to make, and how you can fit this into your budget and plan.
4. Review and Plan
Now that you have a clear view of your business income and costs, you can review these details and create a more concrete budget. When creating a budget, it is also important to consider the goals of your business, and where profits could be allocated to for long-term success.
This is another step where contacting a bookkeeper is a good idea. After all, bookkeepers usually have a good insight into your business and will probably be able to spot things you’ve missed and adjust accordingly.
If you’ve done the calculations, and you’re not making as much of a profit as you’d like, it can be beneficial to seek out financial guidance and assistance to make sure that you are hitting your targeted goals and succeeding in your business.
It seems simple but creating a budget for your business is actually a lot of work. However, the pay-off of having a clear plan and stress-free finances is more than worth it. Do you have a budget for your business? If not, what’s holding you back? For support and assistance, please don’t hesitate to contact us here at Bookkeeping Freedom, where we aim to free you from financial and bookkeeping stress.