Friday 27 July 2018

Business management Basic Tips On How To Set Up a Good Budget For Your Small Business

Basic Tips On How To Set Up a Good Budget For Your Small Business

by Charles Oluchi on 7/27/2018 01:41:00 pm in Business management

Basic Tips On How To Set Up a Good Budget For Your Small Business - A Budget is a plan that outline an organization or a business financial and operational goals. As an entrepreneur or a business individual, you have a write financial budget plan for your business which will help you allocate resources, evaluate your business performance and also formulate a plan.
Entrepreneurs and start-ups are advised to write a business plan and lay a budget before starting the business.

Read : How To Know Exactly What Your Customers Want

In business, budgeting is a regular task which is normally done quarterly or on an annual basis. When you have a budget for your business, you list and know the cost of variables and resources needed to run the business.

Why Does My Business Need a Budget

In business, budgeting help you have an accurate picture of the revenue and expenditures involved in the business. Budgeting also help you determine the success level of your business. It is also a known fact that investors are attracted to small businesses that work and operate on an updated budget.

Benefits Of Having a Budget For Your Business

Budgeting helps you manage your money effectively.
It helps you allocate appropriate resources for your projects.
When you budget, you meet your target and fulfil your objectives.
Budgeting helps to monitor the performance of your business.
It will help you improve your decision making ability.
Budgeting will also help you plan for the future.

Things You Should Understand Before Writing a Budget For Your Business

Creating and managing a budget for your start-up is a key to success. It will help you allocate the right resources and fixed them where it is needed.

Before creating a budget, you need to understand what you are likely to spend and earn in the business. You need to understand your fixed costs and overheads which are costs of premises including rents, taxes, utilities, transport expenses and equipment costs. Direct Costs which are costs for materials, components needed to produce and supply the products/services and also have a projected sale for the business.

What to Include In Your Budget

To create a good and realistic budget, there are things you should include

1. Projected Cash Flow : Having a cash budget as a start up will help project your future cash position on a monthly basis and also identify any difficulty you might encounter.

2. Costs : Your cost should be broken down into fixed costs which includes rents, salaries and variable costs.

3. Revenues : Sales or revenue forecast is a combination of your sales history and shows a clear picture of how the future might be. Having a sales/revenue forecast will help you prepare a projected profits for the next 12 months.