Create a Small Business Budget in 5 Simple Steps
Staying within your business budget is one of the best things that you can do for your growing company. It may seem simple, but the fact is that way too many have gone deep into debt while growing, thinking that the more the spend the more they will succeed, but in reality, the better you are with managing exactly what you have will be your ultimate victory!
Knowing how to budget is the same whether you are managing a home, a small business of one, or a large corporation. The simple steps are the same and mastering them as you begin your business journey will save you heartache in the end. Here are 5 steps to creating and sustaining your business budget:
What’s a Business Budget? Knowing what you are talking about is always the first priority. Never think that a question is too silly, but rather be empowered to know that educating yourself is the key to success. Discover what others define business budget as and create for yourself a definition that fits your brand and lifestyle.
Step 1: Tally Your Income Sources. Where does your money come from each month? Be specific. This will let you know what to expect and how much you are able to delegate each month on expenses. Don’t be ashamed of this number because being realistic is what will get you on the right track to growth.
Step 2: Determine Fixed Costs. Fixed costs are those in which are recurring and always there. That can be your rent, your inventory expenses, the wifi bill, etc. Make a list of what they are so you know where every penny is going.
Step 3: Include Variable Expenses. These are changing costs, like travel, utility bills, shipping costs, and more. Things that do not have a fixed rate but that you can calculate and estimate.
Step 4: Predict One-Time Spends. What times of the year will you need to buy things that are just a one time spend? Is there new equipment you need? Plan out exactly when you will be purchasing so you know when these expenses will hit your account.
Step 5: Pull It All Together. Now that you know every aspect of your finances, you can add it all together and see how much you are spending, how much you are saving, and create a budget based on these facts.
Guessing is never the right way to manage a business. Good leadership begins when you are honest with yourself and can face the facts head on.