How To Create A Business Budget Plan?
October 6, 2022
How to create a business budget plan?
- Tally your income sources
- Determine the fixed costs
- Include the variable costs
- Predict one-time spends
- Pull it all together
Running a business is a risky move. You’re required to do things you’ve never done before after figuring them out by yourself. One of those is creating a business budget plan. It sounds like a heavy task for many. And most of the time, people find it difficult to budget their business. But as a beginner in the business world, you might not be familiar with creating a successful business budget plan.
In this blog, we will guide you on how to create a business budget plan to help you maintain your growing company’s finances with ease. Read on!
Tally your income sources
First, you need to tally your income sources each month, and also determine and list out where the money is coming from. After that, you can add other sources of your business income throughout the month.
Your total number of income sources depends on your business model. So make sure that you’re fully aware of them to gain a full picture of how much your business is earning each month.
Determine the fixed costs
After tallying your income sources, it’s time to determine your fixed costs. Fixed costs are any expenses that stay the same each month such as rent, internet, phone plans, payroll costs, and more. Start reviewing your expenses and those that have stayed the same each month are labeled as fixed costs.
Once you determine them, add them all to get your total fixed cost expenses for each month.
Include the variable costs
Variable costs are usually the usage-based utilities in your business such as electricity, gas, shipping costs, travel costs, and more. They change each month. When you receive higher profits than you expected, you can spend more on the variables to help your business step up.
Just like your fixed costs, you also need to regularly tally the variable costs to monitor your expenses.
Predict one-time spends
One-time spends are those expenses that happen far less frequently. An example is buying new laptops for your business. Don’t forget to list down your one-time spends to help you set aside the financial resources necessary to cover the expenses. This prevents you from a sudden financial burden.
Pull it all together
After gathering all your income sources and expenses, the next thing to do is to pull it all together for you to get a comprehensive view of your financial report for each month.
Tally your total income and total expenses such as the total fixed costs, variable expenses, and one-time spends then after that, compare them to your cash flow (income) to cash flow out (expenses) to track your overall profitability.
Key Takeaway
In this blog, we’ve discussed the simple steps on how to create a business budget plan for you to be on the right side of your business finances. It’s a must to make a well-planned budget, because it’s the map that helps you not only spur the growth of your business, but also track it.
Do you have any questions about entrepreneurship, finances, accounting, and more? Don’t hesitate to contact Benito Keh today to learn more or read my other blogs to receive the best tips and tricks for entrepreneurship!