Creating a monthly business budget may seem like a hassle, but it’s something you’ve been thinking about for a long time. Take the leap! It’s an essential infrastructure project that gives you the ability to make conscientious financial decisions so your business can stay on track and grow.
Step 1: Tally Your Income Sources
The first element of a good business budget is figuring out how much money you bring in on a monthly basis.
Start with your sales figures first (which you can easily get using the Profit & Loss report in FreshBooks), and then go further by adding other income sources you use to run your business.
Step 2: Determine Fixed Costs
Fixed costs are expenses that are charged the same price each month. As you can imagine, incorporating these is by far the easiest part of creating your business budget.
Review your past bank statements or FreshBooks reports. You’ll easily be able to spot your fixed bills and the total amount they cost you each month.
Step 3: Include Variable Expenses
Items that don’t have a fixed price tag each month are called variable costs.
Many of these purchases can actually be scaled up or down depending on the state of your business, using your monthly profit.
Your profit each month will be determined by the earnings you’re left with after paying all your costs. So, if your business does better than you forecasted, you can use the extra funds to increase variable spending enabling you to grow faster.
Step 4: Predict One-Time Spends
A great perk of creating a budget is now you will be able to factor in one-time purchases better than ever before. While some of these items may come up unexpectedly, like the purchase of a laptop to replace the one that crashed, others can be budgeted for months in advance, like that business retreat you’ve been eyeing, to protect your business from financial burden.
Step 5: Pull It All Together
The first four steps of this post detail the elements of a good business budget, so the last step is simply pulling it all together. Take action by using this handy checklist with specific examples so you can create your budget without any hassle:
- Hourly Earnings
- Product Sales
- Investment Income
- Government and bank fees
- Cell phone
- Website hosting
- Accounting Services
- Legal Services
- Raw Materials
- Contractor Wages
- Other Marketing Costs
- Travel & events
- Printing Services
- Office Supplies