Do you want to make a budget plan but lack the know-how? If YES, here are 7 easy steps on how to create a budget plan for your small business and stick to it.
Anytime a person is starting a business, it is advisable that a budget plan is created because this business budget can be presented to investors along with a business plan; thus making them more apt to agree to invest. Most small business budget plans include a list of fixed and start-up expenses as well as a list of flexible expenses.
In order to make sure the budget plan is as accurate as possible, it is important to write down all possible expenses that are to be incurred or might possibly be incurred. However, if the Do-It-Yourself approach isn’t something that appeals to you, you can always hire an accountant to take care of your management accounts. So if you are ready to learn, below are some practical tips you need.
7 Easy Steps on How to Create a Budget Plan for your Business and Stick to It
Step 1. Write Down Start-Up Expenses-: In most instances, a list of start-up expenses will include all the costs that will be incurred when your business is first opened. These typically include computer, PDA, printer, office supply, and office furniture expenses.
The exact expenditure will greatly depend on the type of business being opened. A computer store will obviously have more computer expenses, whereas a shade store may only require one computer in which transactions can be conducted on.
Step 2. Write Down a Monthly Budget-: In terms of fixed assets, it is essential to create a monthly budget. Fixed assets generally include phone expenses, Internet expenses, and rental fees. In addition, a business’ employee salaries as well as the owner’s salary are typically included within a monthly budget. In fact, any type of expense that will occur on a monthly basis should be included within a monthly budget plan.
Step 3. Write Down Flexible Expenses-: The next step to creating an accurate business budget plan is to make a list of flexible expenses. The best way to create this type of list is to think of all the expenses that may change from one month to the next. For most businesses, flexible expenses include utility costs, business card payments, and marketing expenses. In addition, business dinner costs and the outsourcing of services may also be considered flexible expenses.
Step 4. Determine How Much Income-: Another important part of creating a successful business budget plan is to make predictions as to how much income will be earned from month to month. In doing so, the plan can be created in a manner in which a business will not over-budget its expenses.
The best way to predict how much income will be earned is to include the minimum amount of money expected to be earned each month; this way, if more money is earned than expected, a business will simply have extra money left over.
Step 5. Make Adjustments-: Now that a business budget plan has been created, after the business is actually opened, it is important to make any necessary adjustments to the plan. For example, if a company vehicle is purchased, an adjustment need to be made under the fixed assets portion of the budget.
Chances are, as a business grows and expands, its fixed asset expenses will expand as well, making it very important that proper adjustments are always made; this helps to ensure that the business’ budget plan stays accurate.
Step 6. Calculate Profits-: In order to determine how much a business is worth, it is important to calculate profit margins. You need to estimate your projected sales, revenue and net profits. This will help you maintain a stronghold on your cash flow.
Step 7: Update Business Plan-: At least once a month, a business budget plan needs to be thoroughly re-checked by an accountant or by the business owner. By re-checking a budget, a business is more likely to account for all of its expenses as well as identify areas in which money can be saved.