Budgeting for a Small Business

Posted on by Mark Fernandez

How to Prepare a Budget for Your Business

Running a business without a budget is like navigating a ship without a compass. Setting aside time to examine and revise your budget periodically gives you more options when making important decisions about where your company should be going and growing.

The first step in developing an accurate and reliable budget is to take a look at your finances. Review income and expenses, previous records, financial statements and tax returns. We at Business Development Alliance may be able to provide you with some samples and standard benchmarks for a business of your type in your industry.

Once you have compiled all your documents and information, list your expenses. Consider whether you want to develop a budget for three, six or twelve months. Create appropriate categories for all of your expenses; rent, wages, accounting, marketing, utilities, stationery and inventory. Always remember to set aside money for emergencies, slow business periods and economic downturns. If your business is just getting started, you may decide to create a budget for a short time so that you can start to analyse your spending patterns, cash flow and inventory.

Analysing your spending trends and considering your finances will help you project amounts for each category of your budget. Always remember to routinely re-examine your budget. You may want to create targets for shorter periods. Budgets with targets for month-long or weekly periods can make the whole process easier to manage. Review the numbers periodically and adjust them if your business conditions change.

Once you have a working budget, it is important to stay on course and stick to it. Sharing it with your leadership group including your accountant can help you be better prepared and in control of your business and not be controlled by it.

For more information or assistance creating a budget contact Mark Fernandez at  mark@bda-online.com.au

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