Here are some tips that have helped me budget for my business.
Tip 1: Set a monthly income goal
One of the first things I like to do when budgeting is to set a monthly revenue goal.
This will ensure that you allocate sufficient funds to meet your business goals.
Are you hitting your revenue goals? Allocate more budget to sales and marketing.
Tip 2: Set monthly spending goals
You should also set monthly spending goals based on the money coming in.
This means setting how much you can spend on equipment, advertising, and other expenses without exceeding your budget.
When I was running an agency, we allocated a certain percentage to OPEX (operating expenses). From there, we created various “buckets” for owner draws, taxes, profits, and even marketing.
Tip 3: Analyze your weak areas
When tracking your budget, it’s important to analyze your weak areas.
Are you spending more than you need? Are you spending too much on advertising?
These questions will help you identify issues and make necessary changes to keep your business running smoothly.
Tip 4: Make your first forecast each month
It is recommended to make forecasts on the first day of each month.
This helps you anticipate changes in your spending and income and make better budget decisions for the coming month.
Pro Tip: You should create a two-column spreadsheet each month. Column A should be the projected budget and column B should be the actual budget. From there, review your budget at the end of the month.
Tip 5: Consider Seasonality/Industry Trends
It’s a good idea to consider seasonality and industry trends when creating your budget.
For example, if your business has seasonal peaks and troughs, consider them in your budget.
The same is true for industry-specific trends. If the demand for our products or services decreases, we will adjust our spending accordingly.
Tip 6: Keep personal and business accounts separate
Do not mix your personal finances with your business finances. Keep your accounts separate!
Having two different accounts allows you to track your spending on both and avoid confusion.
Tip 7: Choose a solid budgeting tool
Finally, choose a solid budgeting tool that helps you plan and stay on track.
There are many different options, from cloud-based tools to spreadsheets. Choose the accounting software that’s right for you and your business.
For budgeting, I usually use Quickbooks (because it’s cheap and easy to use), but most other apps work.
Tip 8: Be conservative about earnings
Be conservative when estimating your monthly earnings.
Don’t overestimate how much you can earn this month. It’s easy to get carried away and spend more money than is coming in.
If you are conservative, you will always stay within your budget and reach your goals.
Tip 9: Plan for business growth
Finally, always plan for growth.
This does not mean that you need to make large investments or take risks. It just means you have to be ready to scale up when the opportunity arises.
Keep an eye on industry trends and adjust your budget accordingly.
That way, you can grow your business without overtaxing your budget.