It is pretty interesting. When I first started my business, I made it a priority to get a closer look at my monthly expenses. To my disbelief, I soon realized that the majority of my expenses were being spent foolishly. In addition, my monthly income was not increasing, though the workload on my plate was.
After I did some research, I decide to craft a business budget. My new business budget gives my room to grow while earning a profit. In the chance that you are going through what I went through, I am sharing a 5-step plan to creating an awesome business budget.
TALLY UP YOUR INCOME SOURCES
The 1st element of a good business budget is understanding how much money you bring in on a monthly basis. Please include all sources of income that you receive.
Figure out the fixed costs
Fixed costs are the expenses that are charged to you at the same price each month. As you may know, incorporating these costs is the easiest part of the process, in my opinion. You can review what are your fixed costs by reviewing your bank statements
Incorporate Variable Expenses
The expenses that do not have a fixed cost are called variable costs. These purchases can ascend or descend depending on the amount of revenue that your business takes in. Your monthly profit will be determined by the earnings you are left with after you paid all of your costs. If your company does better than you predicted, you could use the extra cash to increase your variable spending which will allow you to grow faster.
Anticipate “One-Time” Spends
A good perk of making a budget is you will be able to factor “one-time” purchases better than ever. While these items may come up unexpectedly, like the computer to replace the one that is crashed, others can be budgeted for weeks in advanced to protect your company from a financial burden.
Mix It All Together
The previous steps of this article outline the elements of a good business budget. Take action by using this checklist with examples so you can your ideal budget without trouble:
- Income Resources: Loans, Savings, Hourly Earnings, Other.
- Fixed Costs: Mortgage, Mobile Phone, Internet Utilities.
- Variable Costs: Wages of Contractor, Raw Materials, Advertising, Transportation, Commissions.
- One-Time Costs: Furniture, Laptop, Office Supplies.