As a small business owner, you more than likely have some lofty financial goals that you’re working toward. The best way to achieve them is with the right budget in place. Not everyone is used to working with a budget, let alone setting one. Setting a budget for your business is going to be different than a personal budget as well. Mark Dicus & Company is here to share some tips to help small business owners set a budget for their small businesses and talk about why budgets are so important.
A Budget for Your Business Helps You Look to the Future
You definitely have vision; that’s why you’re a business owner, after all. Working with a budget for your business can help you achieve the goals that you have for your future and help you enjoy success in the vision that you had to begin with. You will find that with a budget in place, you will be able to work as efficiently as possible as well. Finding financial success is always the top goal for all small business owners.
Tips to Set a Budget for Small Businesses
When you are first starting your business, it can be difficult to nail down a budget and stick to it. However, the longer you go, the more data you will have to work with. That’s when you can start to make some serious plans. Here are some steps to successfully setting a budget:
– Revenue: To create a successful budget, you have to look closely at all your sources of revenue. Add all of those income sources up so that you have a clear picture of how much money you’re bringing in on a monthly basis. Over time, you can account for fluctuations in that revenue.
– Fixed Costs: As a business, you are going to have fixed costs that won’t change no matter how much money you bring in. These costs might include rent, loans, property taxes, salaries and more. You will need to add these up and subtract them from your revenue.
– Variable Expenses: You will also have some variable expenses that will change from month to month. This might include hourly wages, raw materials, utility costs and more. This will need to be subtracted from the revenue total as well.
– Contingency Funds: Make sure you’re setting aside some contingency funds to cover unexpected costs that might pop up.
– Profit: Now it’s time to determine your profits. This final number after all expenses are subtracted will be known as your net income. If you are in the black, you are profitable. In the red means that you are at a loss.
– Budget: Now you can set a realistic budget. If your business is overspending, you can decide where you want to make cuts. If you have a lot to work with, you might want to reinvest.
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If you are struggling to get your business up and running, you can turn to Mark Dicus & Company to consult with you and help you set a budget. Call us today!