A budget for your business will help you plan and build a realistic financial road map for where you want to be. It will help you spot issues before they become critical, such as supply or labor costs rising higher than you anticipated.
How to start a business budget
A good place to start is gathering your expenses/receipts and income from the past month. You want to be able to estimate two main categories with your budget:
- Revenue: Money you expect to earn from your sales, services, and investments
- Expenses: Money you expect to spend – both fixed and variable costs to run your business
Use last month’s real amounts to create a monthly business budget for the coming month.
What time period should you budget for?
Build a monthly business budget for the next 6 to 12 months. Budgeting beyond that is challenging because of economic changes beyond your control, such as local employment trends, weather, hiring, etc. Again: start with the basics and don’t try to measure too far into the future when you’re starting out.
Review your budget regularly
A business budget isn’t something you set once and forget. It’s a dynamic tool that should evolve with your business, market demands, and supply costs. Treat your budget as a living document, reviewing it monthly or quarterly to ensure it reflects your current reality.
Build confidence in your financial decisions
Creating a business budget sounds intimidating at first, but once you have one, you’ll be amazed at the power it gives you to make smart decisions. Here’s to your continued success!
