Creating a business budget is the core step in getting your business started. It contains necessary details related to your business’ finances.
Creating a business budget is the core step in getting your business started. It contains necessary details related to your business’ finances, from income to expenses and even long-term financial goals. With it, business owners can make sound financial decisions, identify whether and where to cut their spending or grow revenue, and even obtain funding to help grow their business.
Here are the four easy steps to follow when creating a small business budget for your business in Australia:
Step 1. Determine Income Sources
First, determine how much money your business is generating and where it is coming from. Start with your sales figures and go from there. Add all the income sources you can think of so you can get a clear view of your business’ total monthly income.
Step 2. Identify Fixed Costs
Next, identify the fixed costs that your business spends every month. Usually, these are rent, payroll costs, or website hosting. Take the time to review your expenses by checking your bank statements or other financial records. List all of them down to get your business’ total monthly fixed expenses.
Step 3. Identify Variable Expenses
While fixed costs are expenses that you can create a fit budget every month, variable expenses are a whole different matter. These costs are not fixed, so you will have to tally them every month. Variable expenses include shipping costs, bills, travel costs, sales commissions, and more. It is easy to meet said variable costs when your income is high. However, low incomes may force you to cut down some of these expenses. Continue tallying them to slowly get an idea of how it fluctuates. This way, you will be able to get an accurate projection for the following months.
Step 4. Anticipate One-Time Expenses
So, you have monthly fixed and variable expenses. The next things you need to consider are one-time expenses or costs that do not happen frequently. Planning them ahead will help you avoid sudden financial burdens in the future. Along with one-time expenses, it is also best to prepare a budget for unplanned expenses.
Start your small business budget with the easy steps listed above today. To learn more about effective budgeting strategies, contact Melbourne based Premier Professional Partners on 03 9347 8033
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