A business budget is essential in planning the future of your business. It sets a good roadmap to help you make sound business decisions. Plus, it’s also needed when you apply for financing should you wish to expand your business.
Creating a business budget may sound a little daunting, but once you get started on preparing one, it will get easier. Still, it may be easier said than done, so we’ve put together some tips to help you get started on creating your own business budget.
1. Know your numbers.
When working on your business budget, it is highly important that you understand your figures. Your goal is to make a realistic budget, because otherwise, it will just create more issues for you in the future, instead of helping.
The first thing you need to do is to assess your revenue. List down your projected revenue from all income sources. If you have been doing your budget in the previous years or quarters, it may be easier for you to assess your projected revenue. If you’re new at this or you’re just starting your business, you may use a competitor’s figures as your basis.
Next, compute your expenses. There are fixed and variable costs. Fixed costs are expenses with amounts that are constant, such as phone and internet bills, rent, and insurance. Variable costs on the other hand are those that may change. Take water and electric bills and the cost of raw materials as examples. There are also some other expenses that may come once in a while, such as expenses for buying new equipment or replacing old furniture. Be sure to include those in your budget too.
Once you are familiar with your revenue and expenses, you can now draw a realistic projected profit. That is what will be left of your budget once you’ve paid your expenses. This is helpful to note because it can help you see if you need to reduce your expenses or if you have extra profit to pay for your debts or maybe even invest in other things to grow your business.
2. Check your budget regularly.
You can set the timeframe in which you will create your business budget. It may be monthly, quarterly, or annually. Whatever works best for you, it is important that you check your budget regularly. Checking your budget regularly will help you analyse trends in your stream of income This will help you assess if your budget is still working to meet your business goals. This can also help you be better prepared for those months where your income may be lower due to lower demand so you can ensure you can stay afloat even in difficult times.
3. Use available software.
We understand if you’re setting aside working on your business budget because you’re trying to avoid all those paperwork and sheets. The good thing is there are different software you can use to perform these tasks. And, what’s even better is that some of them are free. Use them to your advantage.
4. Ask for help.
Of course, don’t be afraid to reach out if you need help in creating your business budget. Actually, it is a good thing to ask for help when you need it. You can work with accountants and bookkeepers in performing these tasks. Plus, they can better help you understand your numbers better so you can make better sound decisions for your business.
Our team at Accrulu is dedicated to helping businesses stay on top of the game by helping them understand their finances better. Reach out to us so we can discuss how we can help you with our range of accounting and bookkeeping services.