Starting a successful business depends on many things – creating a solid business plan, identifying your target customer base, developing your marketing strategy, and, most importantly, establishing a business budget. Because your budget will play a key role in making sound financial decisions for your business, it should be one of the first tasks you tackle.
A business budget is a detailed plan that outlines your finances' current state (including income and expenses) and your long-term financial goals. A well-developed business budget will help you track all your business expenses, plan for the future, economize when you need to, plan for growth, and make a profit.
Experts agree that the best business budgets are flexible and straightforward. Should circumstances change, you must be able to adjust your budget to make sound financial decisions to meet the challenges that will come your way. Think of your budget as a road map that keeps you on course to success.
A Business Budget Can Help By:
- Making it more efficient.
- Predicting slow months and keeping you out of debt.
- Estimating what it will take to become profitable.
- Providing a window into the future.
- Determining leftover funds that you can reinvest.
- Helping you keep control of the business.
Creating a business budget will make operating your business easier. A business budget can also help to make sure that you’re spending money in the right places and at the right time to stay out of debt.
How To Create A Business Budget
You don’t have to be a CPA or have an MBA. You don’t have to do it all yourself. But whether you hire an expert or do it yourself, you need to know your numbers. There are many tools and templates you can use to build your budget.
The essential components of a business budget include income, fixed expenses, variable expenses, discretionary expenses, and personal financial goals. Here is a six step guide to creating your business budget.
- Examine your revenue
- Subtract fixed costs
- Determine your variable expenses
- Set aside a fund for unexpected costs
- Create a profit and loss statement
- Outline a forward-looking business budget
As a business owner, the work of creating your budget will ultimately make your life easier. There will always be situations that arise like special inventory opportunities, seasonal hiring, or emergencies. When that happens, it's good to have a partner like Quikstone in your corner with fast funding for those unexpected business needs. We also offer a no-cost or obligation review, so when the unforeseen happens, you'll know how much you can qualify for. Contact us today to learn more.