Business budget tracking is crucial for every business, whether a start up or a long-established company. Your business budget should help maintain a healthy cash flow.
The business budget should help you establish how much money you need to launch your business. Identify how much it will cost to run the business. Finally, know how much you need to earn to meet your operating costs and also provide some income.
Crunching these numbers help discover if the business is viable and know your operating costs and what incomes you should get.
To keep your budget healthy you need to keep track of a number of things so we have created a checklist.
Sales and revenue is from the money coming into the business from sales of products/services.
Projected sales revenues are best based on last year’s actual sales figures.
StartUps: Lots research and speaking to other businesses in the same industry/niche.
Everything you spend on running your business.
Rent, rates, salaries, equipment and materials, additional services.
Costs should be divided into different categories: fixed, variable, and semi-variable.
Fixed costs: Expenses that remain the same, whether sales increase or decrease. e.g rent, leased equipment, and insurance.
Variable costs: Varying with sales volumes. e.g raw materials to make products, inventory, and shipping costs.
Semi-variable: Fixed costs that can vary by volume of business. e.g salaries, costs transactions, and marketing and advertising.
Everything you earn after subtracting your costs and expenses from your revenues.
Cashflow: Know whether you have any money left over.
sales – total cost = profit
Dont forget you need to pay tax.
Business budget is an overview of how your business finances are performing. Outlining critical information on your finances’ current state (including income and expenses) and your long-term financial goals.
It’s a financial statement over a specific period, typically, a year that will significantly enhance any financial undertaking’s success. In other words, budgeting may as well be a strategic implementation of a business plan.
A budget should include revenues, costs, and – most significantly – profits or income so you know what surplus cash is available for expansion. Budgeting is a process of identifying, gathering, summarising and communicating financial information, allowing one to plan future projects
A business budget is crucial for any business because your budget plays a key role in making sound financial decisions. In many ways, your business budget is a financial road map that helps you gauge where your business finances currently lie and set business goals for the future.
Some business owners launch their operations with a wave of optimism and enthusiasm, but without a well-thought-out budget, they find it difficult to make a successful action plan.
When running a business, it’s easy to be preoccupied with day to day problems and miss the larger picture. Successful businesses allocate time to make and manage budgets, prepare and review business plans and frequently monitor their financial situation and business performance.
Business budgets can help identify areas to decrease spending or increase income, which can increase your profitability. Essentially, budgeting helps you track of your expenses and reduce costs by investing your money where necessary. This may eventually increase sales hence making sure the growth of your business.
If you need investment or finance for your business for expansion a business budget is important. If you need to apply for a bank loan or raise funds from investors, you must provide an in-depth budget outlining your income and expenses.
Budgets help you determine what money you’ve got and what you need to spend. Every business requires a budget in order to be successful.
Furthermore, budgets can also assist you in understanding business risk if you can afford new machinery or equipment, employee new staff or if you can afford new premises before you sign a lease. You’ll be able to use this information to organise your plans for the future growth of the business.
Does the running of your business include several repetitive tasks? If there’s no guidance or procedure in place, it’s possible for some of the steps in the process to get forgotten. This is why checklists are important.
People get distracted, and when something gets forgotten, it’s much harder to recover than if they’d completed the task right in the first place.
Guidance every step of the way makes sure something is completed perfectly every time.
Read More: Why is a Checklist Important?
We all carry enormous knowledge and experience that we want to apply effectively, but we are all prone to make mistakes. There’s only so much we can store in our heads without forgetting something. How to maximise our use of knowledge?
The simple answer to this problem is to use checklists.
How many types of checklists are there? Two. What are the two types of checklists? Read-Do and Do-Confirm checklists are about how you use checklists.
Read More: Types of checklist: What are the two most powerful Checklist Types?
A checklist is a way to document each step needed to complete a task. A detailed set of instructions, a guide of how something is done.
Checklist software allows you to document every step of a process to be used over and over again.
Read More: Checklist Software