Creating a business budget is essential for keeping track of profit and loss, as well as creating a plan for meeting future financial goals. Budgets can be created monthly, quarterly or yearly depending on the size of your business, but generally a monthly budget will give you a better picture of your business’ finances. We have provided you with five tips to create a budget for your small business.
1. Decide on a Medium
Decide what you will use to create your budget. This could be an Excel spreadsheet, an accounting program or a free online service. Whichever you choose, make sure that the system can track and categorize your budget, as well as grow with your business in the future.
2. Determine the Perfect Time Frame
Depending on the size of your business, you need to determine if you will create a monthly, quarterly or annual budget. Ideally, your budget should have figures for all three metrics, with monthly budgets giving you the most recent figures.
3. Include Fixed Expenses
Your budget should include costs that will not change from month to month, or even from year to year. Some examples of fixed expenses include rent and loan payments.
4. Add Variable Expenses
Variable expenses are expenses that change regularly each month. Utility bills and consumable supply costs are examples of variable expenses that should be factored into your business budget.
5. Opt for Regular Forecasts
Your budget should include monthly and yearly forecasts, so that you can regularly track your actual expenses as opposed to your budgeted expenses. Make sure to include a forecast of your earnings, so that you have a year-end goal.