Do you want to build a successful business? If so, you need to have a sturdy budget that you can follow to make sure you manage your finances appropriately. Unfortunately, a significant percentage of businesses are not going to survive the first year.
If you want to make sure that you put your business in a position to be successful, then you need to have a strong budget that can act as a roadmap for your company. What do you need to know about building a budget for your small business? Take a look at a few key tips below, and make sure you employ the best spend management solutions in the industry.
Start With Your Current Revenue
When you are building a budget for your business, the first thing you need to do is start with your current revenue. How much money is your business bringing in right now? You may want to calculate this in terms of revenue per month. If you have a new business, there may not be any cash coming in just yet.
That is okay! There is a good chance that you still had money coming in from somewhere. Maybe you are using your own personal savings. Perhaps you have a loan coming in from somewhere. This still represents income that your business has to work with.
Make a Breakdown of Your Fixed Costs
Next, you need to create a breakdown of all of your fixed costs. These are expenses that you know. For example, you may have rent that you have to pay. Or, you may have a mortgage that you have to pay. It is also possible that you might have employees you have to pay. If you have a subscription to a software program that you used to run your company, you may need to pay them as well.
If you have insurance for your company, you probably have to include this in your expenses. Make sure you understand exactly how much your fixed expenses are every month.
Calculate a Range for Your Variable Expenses
Then, you might have some variable expenses as well. For example, you may have to spend gas on the vehicles that your company uses. Or, you might have to spend money on your utilities. You might have a gas bill, a water bill, and an electric bill. These are expenses that will probably change from month to month as well.
If you have variable interest that you have to pay on certain loans, it might change from month to month. You need to figure out a range for your variable expenses, allowing you to budget for them accordingly.
Have a Contingency Fund Available
As you are developing a budget for your company, you always need to have a contingency fund available. Some people call this an emergency fund. There might be unexpected expenses that you need to cover. You do not necessarily want to have to take out an expensive personal loan to cover those expenses. Instead, you should have an emergency fund that you can draw on when you need it.
If you have a contingency fund available, you don’t necessarily have to worry about your company going under because you get a big bill. You may want to set aside a certain amount of money every month for an emergency fund.
Know When To Ask for Help
Finally, you also need to know when to ask for help. There might be situations where you cannot figure out everything on your own. Fortunately, there are professionals who can help you. For example, you might have a difficult time doing the taxes for your business. You want to claim every deduction that is available to you, but you do not want to get audited.
There might also be a situation where the numbers simply are not adding up. In this situation, you might want to get a software program that can help you do everything. Or, you might want to reach out to an accountant who can do the taxes for your business.
Draft a Successful Budget for Your Business
Even though it can be a significant challenge to build a budget for your small business, you can put yourself in a position to be successful as long as you plan accordingly. There are also a lot of experts who can work with you to help you make sure that you plan a reliable budget for your company.
Do not forget that you also need to review your budget from time to time to see if you need to make changes. If you put your business in a position to succeed, your revenue will go up, and your budget will have to adjust accordingly. That way, you can stay one step ahead of the other businesses in your field.