Did you know that around 90% of startup companies fail?
That isn’t the most hopeful figure, but it should be motivational! You can be in that 10% who succeed, but only if you work hard and know what you’re doing.
One of the keys to success is creating a business budget, letting you stay on track of your income and expenses. If you know how much money you have coming in, you can make sure you don’t have too much going out and keep your business turning a profit.
Find out how to create a business budget with these tips.
1. Know Your Fixed Costs
The first step to creating a budget for your business is knowing all of your fixed costs. These are costs that will stay the same month on month, including rent, payroll, and certain utilities, like WiFi. Make a note of all of these and add them together to get your monthly fixed expenses.
If you’re creating a budget for a new business, don’t worry! You can use projected costs to work out your expenses.
2. Look at Variable Expenses
Next up it’s time to work out your variable costs. These are expenses that vary from month to month, including things like usage-based utility bills, travel costs, and contractor or freelance pay.
Of course, it’s hard to work out an exact budget for things that keep changing! Instead, start looking at your variable costs each month to work out how much they fluctuate and create an average. Remember, the more profits you make the more you can spend on variable costs, whilst it’s best to keep these as low as possible if you’re struggling to make ends meet.
3. Predict One Time Spends
A lot of your expenses will be regular, such as fixed costs. But, there will be one-off costs you have to account for, too. Try and predict these costs by looking at what you need to buy for your business and when.
As you budget, you can set aside money each month to save towards these expenses. When it comes to large or unexpected purchases, this will be a lifesaver!
4. Compare Your Income and Expenses
Once you know your expenses, it’s time to compare it to your income.
First, create a total of all your expenses — including savings — for each month.
Then, add together your total earnings from your business. This could include multiple sources of income, so account for them all. To work out your net income, minus your expenses from your income.
5. Creating a Business Budget Online
To make business budget planning easier, take advantage of online tools.
These services from LMS Project, for example, can help you track your spending and help with other financial tasks such as invoicing. By going digital you can also reduce the chance of losing past data, which is essential when it comes to doing your taxes!
Help Your Business Thrive
Creating a business budget is vital if you want your company to succeed. Keeping your income above your expenses is what’s going to help you stay afloat, so make sure you’re watching both!
If you enjoyed this article, be sure to take a look at more on our website. We write across a range of topics, including business, technology, and health.