Does my small business need a budget

Released on: March 24, 2008, 6:55 am

Press Release Author: gurpreet singh/technoflicker

Industry: Management

Press Release Summary: \"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.\"



Press Release Body: \"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.

Who should Budget?

Every small business owner should budget, no matter the size of business. I have
heard some small business owners say their business is too small to budget, but that
is not true. If you don\'t have a written plan for what your financial obligations
are and how your revenue will cover those obligations and leave some money unspent,
then your business will never grow. In fact, you may out-spend your revenue and put
yourself out of business.

Why Budget?

Budgeting for your small business gives you control over your finances. By looking
ahead to what you know or can reasonably estimate what your expenses will be, you
can then make financial decisions that will keep you from over-spending, or give you
the freedom to invest in the growth of your business.

When Budget?

Every small business owner should have a budget to start their business and then
review it annually. I recommend that small business owners review their budget
several months before the end of their fiscal year. When I say review the budget I\'m
talking about comparing projected budget with actual. In the comparison you can see
if your estimates were realistic. You and your CPA can also plan for last minute tax
strategies, or plan to implement strategies in the upcoming year\'s budget.

The Goal in Budgeting

Remember, the goal of having a budget is to stay in control of your finances in
advance. Setting the standard for your spending and revenue and having a tool to
compare with actual will give you the control that you need to stay profitable. At
the very least it will give you an indication of whether or not your business is
actually profitable and not just busy.

Resource

Throw away all your receipts!
Yes, you can throw them all away after you\'ve scanned them into Neat Receipts. 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.


Web Site: http://www.greatindustrialguide.com

Contact Details: For More Free Resources visit www.greatindustrialguide.com

  • Printer Friendly Format
  • Back to previous page...
  • Back to home page...
  • Submit your press releases...
  •