We are so excited to see new businesses starting up across Central Illinois. For anyone considering launching a new venture, here are five easy steps to creating a budget.
First, why is it so important to write a budget for your business?
- With a budget in hand, you’re more likely to make sound financial decisions.
- You will more easily identify where to cut spending or grow revenue.
- If you need a loan to establish or grow your business, you’ll need to provide a detailed budget that outlines your income and expenses.
Create a list of income sources. You need to know how much your business will bring each month and from where that money will come. Your sales projected figures are a great place to start. For example, if you are launching a lawn care company, you will charge for your services according to the lot. You may add other services such as treatments for lawns or hedge trimming. You may also sell products to customers online. You may also offer a training course for anyone that’s thinking of launching a lawn care business or wants to grow an existing one.
No matter how many income streams you have, you need to account for all of them.
Now you have a better idea of your income to look at expenses. You should include rent, utilities, internet, payroll, etc.
If you are launching a new business, make sure you take account of all projected costs. You will likely have initial costs that will not be repeated monthly but include these in your budget for the year.
Don’t forget to include variable costs in your budget. These may include postage, utilities (electricity and gas), advertising, or marketing (if your business is seasonal, your expenses and income will vary dramatically throughout the year).
As well as including setup costs, you need to consider one-off spends such as training, the purchase of new equipment, or hiring of an accountant. You need to ensure you take all of this into consideration to balance your profit and loss.
It is time to put it all together. You need to tally your total projected income and projected expenses – or actual if you’re creating a budget after the fact. Compare cash flow with costs, and you will have a clear idea of your profitability.
Use your budget to stay on track. If you have any questions about business loans, get in touch with our team at your nearest branch in New Berlin, Springfield, Modesto, and Palmyra.