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Making a Budget for Your Business

 

The point of a business is to bring in money, and once the money starts flowing, you’re going to need a way to monitor your expenses and your profit. The best way to do this? Create a budget for your business!

While plenty of people have personal budgets, business budgets are a bit different. We put together a simple guide to help you make an easy-to-understand, smooth-operating budget that is low stress and gets the job done just right.

 

Putting Together a Business Budget

 

Do some research.

Look at budget templates or examples of budgets from other businesses to know exactly what factors you might want to consider for your own budget. Be prepared to make some adjustments to your business spending habits depending on what you find and what you want your total profit to look like at the end of your budgeting.

 

Keep it organized.

After you’ve done your research, you should have an idea of how you want your budget to look. You may want to create a spreadsheet using Google Sheets or Microsoft Excel that is easy for you to understand and track your budget. In addition, if you’ve seen a template or budget that you’d like to use, go for it! The goal is to have a physical copy of your budget that makes it easy for you to monitor your business’ finances.

 

Determine total income.

This can be done by looking at your revenue. Revenue is the total amount of money you’re bringing in from every source of income your business has. Identify your streams of income and average how much you’re making every month to determine a good estimate for your total monthly income. This number will be the basis of your budgeting.

 

Determine expenses: fixed, variable, and one-time.

Once you know the amount of spendable income you have, you need to highlight the costs of running your business. This will include fixed expenses like rent, payroll, and taxes. You will also have to look at your variable expenses like utilities, promotional costs, and inventory or supplies. Another thing to consider is one-time expenses like replacing an old computer or buying new equipment.

The expenses you must be able to cover are your fixed expenses, so when you know the total of these costs subtract it from your income. The leftover income will be used to take care of variable and one-time expenses. These costs should be factored in in order of priority – if you can afford to cover all of these expenses and still make a profit, great! If not, consider only budgeting for necessities and cutting out extra purchases.

 

Create an emergency fund.

After ensuring your expenses are accounted for, set aside a portion of your income every month (or only during months where you have a little extra) in a contingency fund. These funds you should only touch during an emergency, such as an important piece of equipment breaking down or any other unpredictable occurrence. Better safe than sorry!

 

Review your budget consistently.

Adjust your budget as you see fit. During slow months, modify your budget to cut costs where you can. During busier months, add in extra costs while you can afford it. The point of a budget is to keep an eye on your spending and hopefully result in more profit for your business, so get started with a budget and stay on top of it!

 

 

Friday, December 7, 2018
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