Are you starting out in business and thinking that your
business is too small to have a budget?
Think again. Read this article to
find out why even a small business needs a budget. It’s in 2 parts. Come back for part 2 tomorrow. Gary V’s video also gives some great tips of
how to work on a limited budget. Let me
know what you think by leaving a comment below.
Does My Small Business Need a Budget? – Part 1
By: Melody Campbell
"I only have a small business, I don't need a budget."
"I don't have enough money to budget."
For many small business owners, the word "budget" is something
for the bigger company - maybe they'll have one when their business "grows
up."
What is a Budget?
The simple explanation is a budget is a plan for how you will manage all
financial resources and all expenses for your business. The basic equation that
you want to demonstrate in a budget is as follows:
(estimated )Sales minus (estimated) Expenses = Profit (or loss)
How to create a Budget
If this is your first time to work on a budget for your small business, you
might work from the perspective of having to list cost of goods or services
plus all of your operating expenses to start the process.
How much does it take to operate your phone line? What is the cost of
other utilities? How about the cost of a company vehicle, or what is the cost
of transportation if you're using your personal vehicle to also serve as a
company vehicle. Do you need any supplies or inventory to operate your
business? How about any employee payroll, payroll taxes or independent product
or service providers? Remember to include everything you spend money on to
operate your business even if you allocate some of the expenses to "petty
cash" expenses, such as parking or bridge tolls while traveling to see
clients.
I recommend that you create annual budget, as opposed to a monthly
budget, so you can identify any expenses that you may have that come up only
once or twice a year such as insurance and include them in your list of
expenses. This allows you to amortize or spread the cost of this out over
several months so that you can plan ahead for the expense.
As you work on your list of expenses keep in mind that these are the
expenses that are necessary to operate your business. These should not be your
"wish list" unless you want to budget in some expansion or growth.
You may want to create a budget with just the necessities and another version
of your budget with expansion expenses listed so that you can see the cost of
both separately.
With a dollar figure to work with of your total expenses you are able to
set the standard for or evaluate your sales figures. If you are new to your
business you may need to use the dollar amount of your expenses to help you
determine what your sales need to be in order to cover all costs and show a
profit. If you have been in business for a while you can evaluate whether or
not you are producing a profit by looking at historical sales figures.
As you conduct business during your budget year you should compare your
actual income and spending with what you estimated. This will allow you to
manage your spending so that you don't over spend and cut into or eliminate
your profits. You will also be able to see if sales have met expectations in
order to cover expenses and still remain profitable.
Resource
Throw away all your receipts!
Yes, you can throw them all away after you've scanned them into NeatReceipts.
This handy tool is operated by scanning all of your receipts using a portable
scanner into your computer or laptop. The software can produce expense reports
or you can import the information from the receipts into your accounting
software such as Quicken or QuickBooks. Once the receipt has been scanned into
your computer you have a digital copy so you can through the receipt away. No
more shoe boxes full of receipts!
http://www.thesmallbusinessguru.com/products/item10.cfm
Author Bio
Melody Campbell is The Small Business Guru. You can view more Small Business Owner Resources at The Small Business Guru website. Educate yourself for Success in the Core Competencies to becoming a Master Small Business Owner. New monthly membership trial for only $1 for the first 30 days! www.thesmallbusinessguru.com
Melody Campbell is The Small Business Guru. You can view more Small Business Owner Resources at The Small Business Guru website. Educate yourself for Success in the Core Competencies to becoming a Master Small Business Owner. New monthly membership trial for only $1 for the first 30 days! www.thesmallbusinessguru.com
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Source: by Melody Campbell
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