Preparing a budget, particularly when starting a new business, isn’t just a good idea—it’s vital to your success. Here are some tips to help get you on the right path even before you open your doors.
Purchase a small-business accounting software package. Use the chart of accounts provided by the software to see the types of expenses you can expect your business to incur. You’ll see expenses such as rent, utilities, insurance, taxes, and dozens of other items. Based on your anticipated expenses, plug in dollar amounts for the fixed costs you expect during the next 12 months.
Identify customers and related sales volumes. Try to project your revenues for the next 12 months. This is not the time to put your dreams on paper. Be as realistic as you can about your anticipated revenues. Some expenses, such as employee costs, shipping, and raw materials, will vary based on your sales and revenue projections. Try to estimate these varying expenses in your budget as best you can.
By budgeting from the very beginning, within a short time you’ll have enough financial information to change from guesswork to realistic estimates.
ShopTalk 800® Business Consultant
National Association for the Self-Employed
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