Starting up a new business requires careful budgeting. Whether you’re selling crafts from home or launching a tech start-up, financial planning plays an important role in the future success of your business. You’ll need to make estimates of your future expenses and revenues, while tracking your start-up capital and conducting research into your market. It may sound like a tall order, but don’t worry! With a bit of advance planning and the right tools to assist you, you can create a realistic budget for your new business. Here are a few tips to help you get started.
Do your research first
Before you can create a realistic budget, you’ll first need to understand a little bit more about your chosen market. Learn more about the industry, competition, and future opportunities for growth. You can’t make a budget unless you can accurately predict what your expenses and revenues will look like, using comparable businesses as a guide. There are a number of ways to conduct market research, including evaluating products, consulting with experts, and surveying potential customers.
Estimate your start-up costs
Armed with the facts you’ve learned from your market research, you can then make a list of what your beginning costs will be. This will of course depend on the type of business you’re running, but could include everything from product design to website development. You should also take business activity into account. For example, if you’re planning to open a bakery, you could expect that mornings will be your busiest time period and will require you to pay more staff during this time.
Set up a spreadsheet
The easiest visual for a budget is a spreadsheet, which you can create with Excel, business accounting software, or even old-fashioned pencil and paper! If you need help with this part of the budget-creating process, it can be a good idea to take basic accounting courses at training.com.au or shell out for the right software. In your new spreadsheet, input fixed expenses such as rent, as well as variable expenses such as supplies and utilities. Don’t worry, these numbers don’t have to be exact if you’re just starting out. You can use your market research as a guide and adjust later. In addition to expenses, you can also insert a section for your expected income. Estimate at first, and then fill in these numbers with your real income at the end of each month or sales quarter. At this time, you can also analyse how and why the real numbers differed from the projected figures, which can be a big eye-opener.
Adjust budget as needed
Finally, remember that no budget is set in stone. All businesses experience setbacks or periods of slow sales activity, so be sure that you’ve budgeted for emergencies. Itemize your expenses so that you can cut the fat when needed to cope with these slower sales periods. This will help you stay afloat as you grow your new business.
Taking the time to create a budget before you even sell a single product helps you plan ahead and be more efficient with your business dealings. It can give you valuable insight into your industry, and help you devise strategies for financial emergencies so that you can avoid being blindsided.