When you are the owner of a small business, its relevant to budget, even consider budgeting monthly. Having a budget is essential to your finances and keeping your business on track and growing. Here are some budgeting rules for small business to help you get your finances under control.
What is a Budget?
A budget is a necessary planning tool for helping build a framework for your business your finances. To create your budget, you need to combine past amounts from previous fiscal years. Your budget will provide a detailed view of your assets, realistic expectations for revenue, and how it all balances against your estimated expenses.
The idea of creating a budget can overwhelm small business owners. When you think of budgets, you might envision spreadsheets with many categories, but budgeting doesn’t need to be that overwhelming or complicated.
Budgeting takes time and can’t be done overnight, but it is essential for your business because it allows everybody to be on the same page, a budget helps you see where changes need to be made, and a budget gives you a tool t measure how on track you are in your business.
Below are five budgeting rules for any small business to follow to help them grow:
1. Total Your Income Sources
To create a reasonable business budget, you need to know how much money you bring in every month. Look at your sales figures first, and then add any other income sources you use to help you run your business. Income sources could include hourly earnings, product sales, investment income loans, or savings.
2. Determine Your Fixed Costs
Your fixed costs are your expenses that are charged at the same amount each month. Putting these into your budget is the most natural part of creating a budget for your business. Determine your fixed costs by review past bank statements, and you will easily be able to spot your fixed bills and total amounts each month. Fixed prices could include rent or mortgage, utilities, salaries, internet, government and bank fees, cell phones, website hosting, and insurance.
3. Incorporate Variable Expenses
The items that do not have a fixed amount each month are your variable expenses. Variable expenses are expenses that can be moved either up or down, depending on the growth of your business and monthly profit. Your profit is the amount that you are left with monthly after paying all your business expenses. Your variable fees could include raw materials, contractor wages, commissions, advertising, marketing costs, transportation, travel and events, and printing services.
4. Estimate One-Time Spends
Creating a budget gives you the room to factor in one-time purchases that you might need for your business. These are expenses that may be unexpectedly required, such as replacing a computer. When you can budget your business expenses, you can see where you have wiggle room and the availability for one-time purchases that may come up. Budgeting can help with alleviating financial burdens. One time-spends can also include furniture, software, office supplies, and gifts.
5. Put it All Together
The last step in budgeting is pulling all your items together. Use a checklist with a few categories to create a simple budget that you can easily follow to help you track and grow your business.
Final Thoughts
Budgeting can be overwhelming, but it is vital for your business. You, as a business owner, want to ensure that you have enough money available to keep the business up and to run. You want to grow your business and revenue and provide you have an emergency fund available in case you ever need it on a rainy day.
If the idea of managing your business expenses and budgeting is still overpowering your thoughts or takes you away from concentrating on growing your business, consider hiring an administrative assistant who can handle budgets, paying bills, payroll, and tax filings. Find your Excellent Admin here.