Budgeting for your business is one of the most important systems you need to master. Of course, this is easier said than done. As a business owner, you probably have rent or a mortgage to pay on top of payroll costs, utilities, tax payments, and more.
There are several small steps and simple tools you can use to make the big task of budgeting less complicated.
What is a budget?
A budget is an estimation of revenue and expense over a specific future period of time. It is usually gathered and re-evaluated periodically. For a business, a budget is an internal management tool. Budgets are essential to improve efficiency, aid in goal setting, measuring outcomes, and planning for possibilities.
Budgeting isn’t exclusive to your business. Staying accountable with your own income and expenses is just as important as keeping your business afloat. Chances are high that if your personal budget is in shambles, your business won’t be doing much better.
Depending on what your business is, you have some options to research what to expect for your financial future. You might have to make assumptions based on your location, hours of operation, and type of business. If there are similar businesses to your own locally or online, you can try obtaining information about weekly revenue and consumer patterns from them.
Your goal through research is to find out what your average weekly expenses for overhead, utilities, materials, payroll, etc. might be. If you’ve been in business for a while, you can monitor your past expenses and calculate in additional costs.
To be successful with your budget, you need to stay organized. Create a spreadsheet monitoring every expense and income your business has. Include basic bills, employee salaries, taxes, insurance, and small things like picking up new printer ink or paperclips.
Cut Costs when Beneficial
Always keep your eyes open for ways to minimize expenses. Factor in whether or not the lower cost is associated with lower quality, and if your business can afford either loss. Wait to make purchases until the beginning of a new billing cycle.
Budgeting Apps & Software
There are plenty of resources out there to assist you with the many facets of budgeting. Here are a few we recommend:
- Quickbooks Enterprise
- Quickbooks is an accounting software for small businesses. This app allows users to keep track of pretty much every aspect of budgeting. It can be tailored to work for your industry and helps you make better decisions with advanced inventory tools. You can make and receive payments and quickly create powerful reports to give you insight into your business.
- Mint is one of the oldest and most well-known budgeting apps. It’s owned by the same company as Quickbooks and TurboTax. There are many features to assist you in tracking and managing your money. Mint automatically categorizes transactions and tracks them against your budget. You can adjust your budget at anytime as things change within your life and your business.
- YNAB (You Need a Budget)
- You Need a Budget has a unique approach to budgeting. You build your budget based on your income, accounting for every single dollar. This app keeps you aware of everything you spend money on, and makes you think about whether these purchases are necessary. This is a good app for personal budgeting, but can be helpful as a business owner, as well.
While you work on your budget, consider how building good habits can improve your life personally and in business. As you work on your budget, you will start developing healthy habits that will make budgeting more intuitive the longer you work at it.