The good news is, you’ve had a fantastic idea for a new company and you’re raring to go. Bad news? You don’t know how to make a business budget. Figuring out how to do a business budget can be a daunting prospect, however the perks of being a small business means you can start with your essentials and break it down from there. In this article, we’ll outline how to prepare a budget for a small business and fast track your company on its way to financial success in 3 simple steps.
1. Consult Your Business Strategy
What are your business goals? How will this translate into success for you? What tools and resources will you need to achieve this?
These are the questions you need to address when you first begin developing a budget for a business. Whether you’re a 5-person team comprised of specialists or a 100-person team, every resource you use will matter. This is where you learn, for example, if you really need several professional programs and applications to help you achieve success or one or two specialists to do the job. It also helps maintain accountability as you report on each quarter and you’ll refer back to if your goals were realistically in-line with your budget.
2. Figure Out Your Total Expenses
A small business budget can begin in its simplest form: what do you need to spend on a daily basis to ensure your company is running smoothly? Tally up exactly what resources you’re using, and if you need to break it down by departments, do so. This then allows you to see just what you might be able to do without and how much you need to earn in profits to not only cover the costs of the business, but also pay your salaries and any extra employee benefits you might want to consider to help employee retention and satisfaction.
3. Work Out Expected Sales And Revenue
Yes, this one can be tricky, considering you will be playing it by ear most of the time – however, when it comes to business budget planning, this is a must. Not only will it help to track your finances accordingly, but you’ll also be able to see whether your sales techniques are working and which areas of the business need improvement.
Using these as starting points will help you to create a viable small business plan that you can use regularly to ensure you’re maintaining and surpassing your business goals. There really is no ‘right’ or ‘wrong’ way to budget for your business – so start tallying up those expenses and be as hard on yourself as you need to be in order to make sure your profit exceeds any losses you might face.
Our Chartered Accountants here at Profile can further advise you on how to not only effectively budget but also optimise your cash flow. We would be delighted to help, so we invite you to contact us to book a free consultation.