Are you looking to start a small business but not sure where to start when it comes to budgeting? Don’t worry, you’re not alone. Figuring out how much money you need and how to best manage your finances can be daunting, but it’s definitely doable. In this post, we’ll walk you through five simple steps to create a small business budget that works for you. So read on and get started!
Step 1: Add up your earnings.
First and foremost. When creating a small business budget, you must first determine how much money your company is generating each month and where those funds come from.
Step 2: Calculate the Fixed Costs
After you’ve worked out your revenue, it’s time to figure out your expenses, starting with fixed costs.
Any monthly expenses that remain the same are known as fixed costs. Rent, some utilities (such as internet or phone services), website hosting, and payroll expenditures are examples.
Step 3: Include Variable Expenses
Variable costs don’t have a set price and fluctuate month to month depending on your company’s profitability and activities. Usage-based utilities (such as electricity or gas), shipping expenses, sales commissions, and travel costs are examples of these.
Step 4: Estimate one-time expenditures
Whether they are fixed costs or variable costs, a large portion of your business expenses will be recurring charges that you pay each month. However, there are additional expenditures that will occur far less frequently. Just remember to include those costs in your budget as well.
Including one-time expenses in your budget might help you set aside the money you’ll need to pay for them and shield your company from a sudden or significant financial hardship if you have any anticipated one-time expenses (like a new laptop or an upcoming business course).
Step 5: Compile It all
You have gathered all of your sources of revenue and all of your outgoing costs. Next, what? putting everything into perspective to gain a full picture of your monthly financial situation.
To calculate your overall profitability, compare the cash flow in (income) to the cash flow out (expenses) ratios on your business budget. To do this, sum up all of your fixed costs, variable costs, and one-time expenses.
Congratulations on making it to the end! By following these five simple steps, you’ve created a budget for your small business. This is an important step in managing and growing your company. Remember, creating a budget is not a one-time event – it’s something you will need to revisit often and make changes as your business evolves. If you find yourself struggling with cash flow or forecasting future expenses, don’t hesitate to BOOK A CLARITY CALL with me. I can help you get a better handle on your finances and steer your business in the right direction. Thanks for reading!
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