When you own a small business, a budget can be an important tool for business growth and keep you on track. Budgets provide a road map that guides you from present operations to the ultimate expansion and growth you envisage for the business and facilitate the attainment of these goals.
Sustaining a small business and making it flourish can be a big task particularly for new business owners. Furthermore, when the business revenue fluctuates, it can be difficult to plan.
Fortunately, these tips can help you develop a budget for your business even with a variable income.
Use and Prepare Spreadsheets
To ensure you account for everything in your business, you must recognize the amount that’s going out and into your business. You should recognize the actual revenue you obtain, the amount you spend on supplies, the amount you use to pay employees and so on. To achieve this, prepare spreadsheets after identifying revenue factors and expenses. Ideally, you should do this daily to monitor your business’s cash flow.
Tally Your Revenue Sources
The first component of a good budget is determining the amount of money you generate on a monthly basis. Begin with your sales figures before including other revenue sources you use for running your business.
Establish Fixed Costs
The easiest part of developing your budget will be establishing your fixed expenditures since these expenses have a similar price tag every month and are typically vital to managing your business. Examine your previous bank statements and reports to determine your fixed bills and what they amount to every month. Fixed costs are not dependent on the level of services or goods your business produces. This category includes costs such as rent.
Include Variable Costs
Variable costs are items that change in line with the business’s activity. Costs such as wages and electricity fall in this category. You can scale most of these costs down or up depending on your business’s state via your profit. You will determine your monthly profit using the earnings that remain after paying your expenditures. Therefore, if your business performs better than you’d envisioned, you could use the additional funds to raise variable spending, enabling fast growth.
Predict One-Time Expenses
A great advantage of developing a budget is that you can include one-time purchases. While some purchases may be unexpected, you can plan for others beforehand, for instance, a business retreat to protect your business financially.
Be Conservative in Your Approximations
It is essential to set some additional income aside for unexpected expenses. This way, your business will have some flexibility. Therefore, even if you expect a certain amount, plan for the fact that you’ll earn less than what you expect.
Furthermore, if you’re expecting to spend a certain amount on expenses, plan for greater expenditures. It is better you have extra money than you expect than less at the end of the month. Conservative estimates allow you to have an amount that’ll be closer to what you anticipate at the end of the month.
Write it Down
It is important you monitor the money that comes in and goes out from your business. Small business proprietors that avoid the monetary details are likely to experience failure compared to those that are keen. Record both your actual and estimated expenses and income, and make necessary adjustments.
Willingness to Make Changes
The spreadsheet will indicate where your budget requires tweaking. However, you should be willing to make adjustments. Decide from the beginning that you will evaluate your budget on a quarterly or monthly basis and make any required changes.
Consult an Expert
Sometimes, we simply need to admit that we need assistance. If you’re extremely busy completing tasks and meeting business goals, it might be valuable to get assistance from an adviser.
Although creating a budget can be tedious, it is vital for your business’s future. It helps control your finances and cash flow. A budget doesn’t have to be rigid, but you must stick to it and be open to revising and reviewing it as necessary.
Dailey Bookkeeping Services is a Xero Certified Bronze Partner and a QuickBooks Online Certified Advisor, so if we can help you with your business budget, just give us a call, we would love to help you! The owner, Jacqueline Dailey is a Certified Public Bookkeeper, an Advanced Certified QuickBooks and QuickBooks Online ProAdvisor, a Sleeter Group Certified QuickBooks Consultant and a Xero Certified Bronze Partner. We work remotely so we can work with any company located in the U.S. If we can help you with this process or provide you with custom reporting, please give us a call. If we cannot help you, we will refer you to someone who can! Feel free to visit our website at http://www.