Keeping a new small business healthy and moving forward requires focusing on many different areas at once. One of the most important responsibilities you have is making and following a budget plan. But it can be tricky knowing how to set up a plan that adequately provides for needs without over-spending. Here are some steps you can take to make your budget plan realistic and feasible.
Do your homework
Do some research in your industry. What are common expenses and average revenues for businesses like yours? There is a wealth of information online including through the IRS website. The library can also be a source of useful information. Small business owners are a supportive group so don’t be afraid to talk with people running businesses similar to yours and glean useful information and wisdom from them.
Start with some ballpark figures
Whether or not this is your first business venture, starting out the budget is going to be imprecise. On the other hand, you do have some idea of supply numbers and how many employees you will need getting started so calculate with those round figures. Factor in the cost of renting your business location and extra costs such as electric, water and maintenance. What will you need to bring in to cover those expenses and what monthly revenue goals would you like to reach? Although these figures will be estimates, they give you a skeleton upon which to build your budget plan.
Give yourself some leeway
Those estimates are just a guess, so go ahead and build in some cushion by allowing margins for expenses and profits. You can pretty much count on something unexpected popping up and margins help you prepare for the unforeseen.
There are likely several suppliers from which to choose so do your due diligence and compare. Inquire about things like large order price breaks or paying by installment. Only decide after you’ve shopped around and are sure you are getting the best deal possible. Also, look for ways to hold down costs in your business such as using private contractors rather than full-fledged employees.
Keep accurate financials
Once you are underway, spreadsheets help you keep track of all your outgoing costs and incoming revenues. You can’t get an accurate financial picture without all the information. Daily records will provide you with the clearest picture of how your business is performing and show you where your budget needs adjusting.
Be willing to make changes
The spreadsheet will show you where your budget plan needs tweaking, but you must be willing to adjust. Decide at the outset that you will review your budget plan on a monthly and quarterly basis and make any necessary changes.
Better to go with a pro than drop a plate
With all the plates you are spinning, if you find that the budget is always taking too much attention or time you may need to consider talking with a financial consultant.