When you’re a small business owner, every penny counts. To be financially successful, you need to carefully track your income and expenses so you can ensure a healthy profit margin. To do this, you need to create a small business budget. Though it may sound daunting at first, if you take the time to set it up and manage it closely, it can be a game-changing tool to help you reach your financial goals – By Square.
To help, we’ve put together a six-step guide on how to create — and manage — your small business budget.
Set up your budgeting system
Before you start breaking down the numbers, determine what system to use for creating and tracking your budget. If you decide to use a spreadsheet, you can find many free small business budget templates online, which give you the framework to get started. Otherwise, you may want to rely on an accounting program. Regardless of what you use, find a system that’s comfortable and easy to maintain.
Forecast your revenue
Once you have your system set up, you’re ready to start entering numbers. First, look back at your records from the previous year to find out how much income your business has been bringing in each month. If you’re just starting out, look at industry averages to figure out what kind of monthly income you can expect. Based on your records (or on industry averages), add up all your recurring and expected income sources, and forecast what your revenue will be for each month of the year. If you have a seasonal business, take note of slow months throughout the year, as you need to project lower revenue during those months to plan accordingly.
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