Budgeting is often a difficult task for small business owners. The reality of the situation is that you’re probably not going to have a lot of extra money lying around, and you need to know how every penny is being spent. Thankfully there are some simple things you can do to help budget your small business more easily.
Determine Your Business Operating Expenses
A business operating expense is a cost that your business incurs to run and operate. These are things like rent, utilities, equipment, supplies and other expenses that you have to pay for in order for your company to function.
When determining how much money you need to set aside for these costs each month or quarter it’s important to consider all of them so you don’t leave anything out, says Jared Kamrass. You may think that some of your expenses are small enough not to worry about but if they add up over time then they could become quite significant!
Estimate Income And Revenue
It’s important to estimate your income and revenue, as well as predict it. You should also plan for any expenses that you may incur along the way.
This can be done by creating a budget based on past data and future projections, Jared Kamrass but it’s best if you have some sort of financial planning software or app to help with this process.
Create An Actual Budget As Well As A Projected One
An actual budget is the final result of your projected budget. You can use a spreadsheet or other software to create both types of budgets, but if you’re just starting out with small business accounting, it might be best to start by creating only one type at first–the projected version–and then moving on from there once you’ve gotten used to the process and feel comfortable making adjustments for future months.
• Use numbers that are realistic for your business size and growth rate (but don’t be afraid to dream big).