Introduction
Creating a budget for your business helps focus efforts and financial resources on your company’s most important goals. You will focus on sales targets when creating the revenue portion of your budget and consider all of your expenses, whether they differ from last year, if you can reduce expenses this year, and other questions.
How to Use Your Business Budget
Your business will benefit from the budget if you update it monthly, using the expenses and income from the previous month as a guide for you, while considering your financial goals or objectives for the year.
Additionally, work with any other stakeholders in the business to find out if they have information regarding upcoming issues that could affect sales and budget expenses, positively or negatively. This allows you to adjust the budget and your financial forecasts over time.
A monthly review of your company’s budget may indicate the efforts made to achieve business goals. For example, if you switched health insurance companies for more affordable coverage, you might see how this change impacted net profits.
Reviewing your business’s monthly budget can also help identify potential problems. For example, if you have a retail business, you might realize that you need to increase your advertising spending in the fall to take advantage of the holiday shopping season. Or if you made changes that might have tax implications for your company, you may need to increase the budgeted accounting expenses in anticipation of the additional work required.
Basic Business Budget Template
The table below outlines income statement items that you can use to create a basic business budget. Depending on the type of your business, you may add additional types of income or expenses. This table is designed to give you a general idea of the items you should include in your business budget. An Excel spreadsheet works well for this task.
Why You Need a Budget for Your Business?
If your company is small, you may wonder why you even need a budget. After all, you likely have a good idea of your monthly cash flow and expenses. This may be even more true if your company is seasoned, with a cash flow pattern similar year after year. Why write a budget for your business?
However, even if this is the case, consider creating a basic budget, like the table in this paper. Even the best seasoned companies can face problems with their supply chain, or encounter unexpected expenses like a significant rent increase. The budget will also reveal additional areas where you can cut costs to enhance profits. The more your company can record and track data, the better off you will be.
Having a modest budget even if updated only once a year allows you to plan for these events and be more prepared when they occur.
Conclusion
Creating a budget for your business is an important step in achieving your financial goals and increasing profits. Continuously updating and reviewing the budget monthly helps you analyze your business’s performance, identify potential problems, and adjust strategies as needed. Use the template provided in this article to create a basic business budget and make the most of your financial resources.
Source: https://www.thebalancemoney.com/sample-business-budget-template-393033
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