5 Budgeting Steps for Business Owners
Budgeting for business can be overwhelming, especially in today’s economy. Not all new business owners know the importance of accounting services for small businesses. Budgeting is a part of that and it’s an absolute must. It can be overwhelming for any startup business to know where to begin, but Ursa’s got five simple steps to help you with the process of budgeting for business.
1. Track Expenses
In order to budget your business, you need to know where your money is going. Some things are more obvious; rent / mortgage, utilities, payroll, inventory, and any other monthly expenses. Some of these things are stable, other things are less predictable due to supply and demand or price changes. Then there can be additional unexpected upcoming expenses and budgeting becomes more complicated.
When you are first starting out, you’ll likely need to make some large expenditures. Technology, down payments, office furniture are all a part of these expenditures. These won’t be month to month expenses, but you’ll want to have a line item in your budget for further expenditures.
Another compilation is if you’re starting your new business from your home. For example, you probably use the same internet for both personal and professional reasons- but how much should be a business expense?
Figure out what you are spending and on what
Take at least a month to create this list and review it
Start a spreadsheet or a document to track exactly where every penny goes.
The easiest solution is to hire an outsourcing accounting service for small business which will provide you with a professional analysis of your expenses and can determine who pays for what if your new business is based from home.
2. Know Your Income
You can’t spend money unless you have money. You need to know what you have on hand and what is coming in so you know what you can spend.
See our blog post “Unconventional Ways for a Startup to Raise Money” to learn more about the following ways to fund your business
Small business loans
Venture Capitalists
Small business investment companies (SBIC's)
Personal revenue
Grants
Family & friends
Crowdfunding
There also may be restrictions on what you are allowed to spend money on. For example you may get an economic development grant to be used for leasing property but you can’t use that grant money to buy inventory for your shelves. Keeping good records is a must, as organizations that provide grants are commonly audited! This is another area where bookkeeping for startups is important and why you might want to consider using an expert accounting and consulting firm to help with budgeting for business.
3. Set Financial Goals
What do you want to achieve with your budget? Maybe you are hoping to expand and scale your startup. Perhaps your goal is to make a certain income to better support your family. It’s also possible that you just aren’t sure! Having specific goals will help you stay on track when you are budgeting for business.
Take the time to write down the financial goals you have for your business. And if you don’t know, brainstorm! Your financial goals should be built into your startup financial model.
4. Make a Plan and Stick to It
Once you know where your money is going, what’s coming in, and what your goals are, you can start to make a plan. When you budget for business, it’s best to have categories; these can include overhead, employees, inventory, supplies, or whatever fits your business needs.
There are a lot of software options that can help you map out your plan. You’ll enter your categories, all of your expenses, your cash on hand, and your income. From there, you’ll see where your money is going and exactly what you will be spending. Do your best to stick with the plan.
If you don’t have the time or energy to learn new software, you can always partner with a company that specializes in outsourcing accounting services for small businesses. These firms are usually completely remote companies based online. It’s easy to reach out via email to find out how they set their bookkeeping prices for small businesses.
5. Be Flexible
The final step when budgeting for business is to be flexible. The nature of business is that expenditures will come up unexpectedly. Unexpected expenses are hard on any startup business- they include sudden price changes, missed work, on site accidents, and a plethora of other things that just seem to pop up out of nowhere. A rainy day type fund is the way to go for these expenses.
Bookkeeping for Small Business is Easier with a Partner
Budgeting for business is overwhelming, especially when you’re focused on running the business and making it successful. Partnering with an experienced accounting firm for SMB’s and startups will take a lot of those worries off your plate. They team up with you to help build your budget and can be a comprehensive resource for all of your financial needs, including the dreaded tax season!
About Ursa Consultants
As a business owner, you must have the right financial experts prepare your financial reports and other financial statements. The accounting experts here at Ursa Consultants are highly skilled finance professionals with a rich background in accounting, knowledgeable in a large range of accounting principles, and able to offer you top-notch fractional financial accounting services.
The most significant benefit of online bookkeeping services is the timeliness of correct records that can be relied upon by your company to make critical financial choices.