For some entrepreneurs, budgeting for their small business is an unpleasant chore that starts and ends with dissatisfaction. You dread starting it, and at the end, you don’t feel like you got what you wanted. Or worse, you feel like the finances aren’t working out and you’re spending more and earning less than you anticipated.
It’s like a home renovation: you think the kitchen upgrade will cost $50K, but then you find out you have to re-wire the whole downstairs and that adds another $15K to your expenses, and suddenly your budget is blown out of the water.
How do you control all this? Make a bulletproof budget. In a spreadsheet, make a list of expenses. Don’t forget anything:
- Contractor/vendor pay
- Advertising/marketing/public relations
- Registrations in trade shows, conventions, etc.
- Travel & event expenses
- Office supplies & equipment
- Professional services such as cleaning, security guard, taxes, etc.
Next list all your income. This may include:
- Earned interest
- Capital gains
You can break profit and loss out monthly or by project, but make sure your annual cash flow statement goes by the calendar year to make doing your taxes easier.
Once you can see what all your expenses are, build in some contingency. Not all your expenses necessarily stay the same price, and sometimes you run into an obstacle (like that electrical rewiring I mentioned) that you can’t avoid. Some entrepreneurs assume a risk of up to 20%. Look through past years or months and see the difference between your budgeted expenses versus actual expenses. The variance should be your guide.
Finally, with a budget laid out in black and white, you can see where you might need to amp up your efforts and sales. Some projects may only gain you marginal income, while others make better revenues. A solid budget can help you determine which projects you can cut.
Need help with all this? An experienced Online Business Manager can whip your topline budgets into shape fast, and provide you with the high-level guidance you need to prune, nurture and grow your business. She can work with your bookkeeper to get your finances buttoned up, and create finance plans that will carry your business into next year safely.
If you’re ready for budget worries to be a thing of the past, contact me today!