If you’ve been following my recent posts, then hopefully I’ve already convinced you of the value and importance of a business budget plan.
Running a business is hard enough, without also feeling as though you’re running it in the dark. By providing a realistic picture of your finances, your budget plan can act as a friendly ‘partner in crime’ (as it were!), helping you see the way ahead more clearly.
The results are sharper decision-making, clearer target-setting, and purposeful planning that speaks directly to the business areas that need it most, such as improvement and growth.
That said, it’s easy to feel intimidated by the task of creating a business budget plan from scratch – particularly if numbers aren’t your strong point.
That’s why I’ve detailed the process in six easy-to-follow steps below.
Step One: Estimate your monthly sales
Every business needs a target to work towards, and this figure is going to be yours.
Use previous sales figures to provide a realistic idea of what you could achieve, and to help you decide whether to set a more ambitious target, perhaps to help grow the business.
Step Two: Calculate your fixed costs
Fixed costs are those consistent, recurring expenses that must be paid regularly, and are necessary for running your business.
For example, yours could include rent for office premises, insurance expenses, and loan repayments.
Step Three: Calculate your variable costs
These are regular expenses that will vary from month to month, such as the payments you make to freelancers, or the cost of the materials needed to carry out your work.
Step Four: Calculate your one-off costs
These are expenses you’ll only pay once or rarely, such as business domain name registration and office furniture.
One-off costs could also include things like essential computer software packages… or indeed, a brand-new laptop.
Step Five: Determine your profit
When you subtract your costs from your sales figures, you’ll be left with the best figure of all – your business profit!
Step Six: Regularly monitor your performance
This final step is the most important of all, because if you don’t follow it, all the hard work you’ve just done will go to waste.
A business budget plan is a living document that must be revisited and re-evaluated, so you will always have a clear picture of how your business is performing financially. Not only will this help you make better decisions, but it will also stop you from spending money you haven’t got.
To make sure you don’t forget, actively diarise regular budget check-ins, ideally at the end of each month. You can use this time to compare the figures in your budget plan with the figures your business has achieved.
From there, it should be easy to see whether you need to tweak your targets – or even make them more ambitious as time progresses.
Need some extra help?
It can feel daunting to put a business budget plan together for the first time. So if you’ve got any questions, or would just appreciate some friendly support, please contact me to arrange a complimentary Discovery Call.