How do I create a budget for my business?

A budget gets a bad name because most people feel that a budget is a restraint on what you can spend. Although this may be true, a budget is also the map or plan to keep your business on the road and running smoothly without one it would be like driving across the country without a map. You would be lost most of the time!

There are several elements that are necessary to any good budget the most fun is the income. Income is the goal of any business and certainly we all want this to be a great big number! Income is the basis.

So the second element of a good budget is the expenses. Rent, employees, the government all are things that take from our income but are necessary to keep our business on the road. No business lasts long without paying their taxes. These expenses are your overhead and must be paid to keep your business. .well in business. Advertising, products, payroll, taxes, all these things are necessary for your business and must be part of your business budget.

Here is a list of several expenses you should have in your budget. Cost of the building or office whether your rent or have a mortgage payment this is a big part of your expenses. Cost of the materials you use to make your products. Cost of the employees and the benefits you pay them. Cost of the taxes and licensing all the things you pay the government. Advertising, if no one knows about you than you have no business, these costs can not be ignored and some of the best advertising will cost you accordingly. Website costs-no successful business is without a website. This is a great way to promote your business and help customers find you. Computers, tools, furniture, and equipment are all necessary for your business. There are many more but these should help you start seeing all the things that are expenses for your business.

The third element is a time frame; most budgets have a monthly income and expenses as well as a yearly. Both are necessary, especially if your business is seasonal-having a budget to reflect your income during tax time as a CPA all year long would not be realistic. Or if you are in sales reflecting your holiday sales in January would also be folly and lead to being in the red really fast the rest of the year. So although you have a yearly total you would have your budget broken down into monthly differences with the leanest months income being enough hopefully to cover your overhead or a savings from feast months to maintain the business through the famine seasons of your business.

The forth element is the profit this is the income minus the expenses and is the part of the budget that you always want to see in the black.

The fifth and most important budgeting element is a review, all the plans in the world are ineffective if you don't check them to the reality of your business. If you planned to make more than you actually did then maybe you shouldn't budget as much in your expenses.

Creating a budget for your business is a necessary step in creating a successful and prosperous business. It is a important element in a business plan and will be necessary if you want to get a business loan or sell your business at a future date. A business budget is a mandatory piece of your business systems.