Introduction to budgeting
When starting a business, managing your finances is incredibly important to succeed. Budgeting is a key part in keeping your business steady, and helps prevent major problems, like using all your money and spending too much on irrelevant things.
Budgeting is helpful for many reasons.
Having a budget helps you plan ahead so you don’t get caught off guard.
It helps you understand your cash flow better
It allows you to see progress within the business and also allows you to recognise what areas you need to spend more on or areas you can improve if you have the extra money.
How to start Budgeting
Firstly you want to find out how much money your business is making (This can be found by studying past income data or by predicting your future revenue.) You may also have other sources of income like investments which you should include.
After this you must recognise what your business expenses are. This may include; rent, salary, potential bank loans. This will depend on your business but product you buy and shipping costs will also be included. You may want to separate your expenses into two separate categories, monthly fixed expenses and flexible expenses. Your fixed expenses will be the payments you are required to pay each month to keep the business running, e.g. rent, salaries, etc. Then your flexible expenses will comprise of all the items and products which you can decide how much you need or you can adjust what you buy depending on the demand. For example, you can buy more products than your previous month if you predict and increase in sales.
Now that the base of the budget has been set, you can set goals to achieve
For more information on budgeting and help on more topics, feel free to ask a virtual assistant at QPA.
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