Budget For Your Business
Many small business owners are usually so busy running the daily operation of their business that budgeting and managing finances are put on the back burner. Regardless of how small the business, budgeting is key and a working budget should be drafted in order to have good financial management. Businesses that don’t have a budget are more apt to fail than those that do.
A Working Budget
A working budget is a work in progress. It should be reviewed daily. Based on how the business is doing adjustments are made and followed. The working budget is the business game plan.
A working budget helps the small business owner assess the financial health of the company. The business owner can not and should not assume potential opportunities or pitfalls unless they have a budget.
What Included In A Working Financial Budget?
The money or revenue from the sales a business expects to take in and the money expected to pay out is part of the working financial budget. This budget should be completed for a year and looked at the variances between the figures budgeted and the actual ones. At the end of one year, the budget can be adjusted for the second year.
Coming Up With The Numbers
Historical data can be used is you are a seasoned business owner. If you are a new owner research will need to be done ie; your sources of income, who will buy your services or product, pricing, cost of advertising, and competition.
Expenses— you have two types; fixed expenses are rent and other items that don’t change month-to-month and variable expenses that do, ie; utility bills, advertising budgets etc. Draw up a business budget worksheet to help you track your expenses.
If you don’t have a working business budget there is a possibility you will go out of business. It is imperative that you track and control your cash flow and profit. The only way to do this is to have a budget.
Learn From Your Mistakes
Make sure your numbers are realistic. Put in enough detail and don’t be too general. Ballpark figures are OK, especially in the beginning. You will learn from your mistakes as how to make you budget work.
Don’t get sidetracked, look and use your budget daily. Record differences in your income and expenses and your business will run smoother in the present and the future.