Top ten tips on setting a business budget (part 1)
One place where many new business owners
unfortunately completely fail revolves around their
budget- either the lack of a budget, the creation of a
very improbable budget, or creating a decent budget
and not following it. Much like a budget made for
running the home, the business budget is an
extremely useful tool in helping to manage spending,
to help gain and overall picture of business health and
of course, is always necessary for basic accounting
Here are the top
5 tips for setting up
a business budget…
1. Be realistic.
When setting a budget for your
business, it’s best to not do two thingscut yourself so short that it’s impossible
to take some amount of risk translating
into reward, and on the flipside giving
your budget such a high value that
you’re allowed to spend like it’s going
out of style. Know where your costs are
going to be based on your business’s
projections for that year and plan on
that. Don’t assume that things are
always going to be bad, and don’t
assume that the world is your oyster
right away and spend, spend, spend.
2. Base your budget on how you, the owner, spends
money and how that fits into how you run your
This relies on thinking about your personal situation- never
make a budget based on a prefab template. This may rely on
how you do you purchasing, how you bill customers, and
other basic functions that are also unique to your business.
3. Accurately base your budget on your income
Income projections aren’t the same thing as a budget, so
never treat them the same. This is something that should
be made clear to every business owner but unfortunately, is
a common basic mistake new small businesses make.
4. Include business savings into your budget and
treat it as a basic expense.
5. If your business deals with cash, find a way to track
that like a hungry hawk on a mouse. This is an area
where most budgets fail.
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