How to Create a Budget for a New Business

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.

business accounting

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.

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Financing a New Business: How to Go About It

Financing a new business, whether it is for a start up, for expansion or for keeping it together through rough times, is always a difficult task. Given the present economic state, getting funds for businesses have become even more challenging, yet you should not lose hope. Your business success highly depends on your perseverance in finding a suitable finance solution for your needs. Here are some tips to help you find a solution for your financing needs.

financing a new business

Liquidate your Assets

Based on recent business statistics, more than 50% of business owners start-up their businesses with money from their own pockets. If your savings or checking account is still not enough but you’re so ready to start, use your other assets to finance a new business. Sell valuables and other pricey items you no longer need. You may auction your antiques, jewelries or the car you do not use. Instead of allowing them to collect dust and deteriorate, you’d get additional cash and people who will appreciate your items even more. Check out your life insurance, you can actually borrow up to 90% of its cash value for very low interest rates too.

Attract Investors

Investors can be heaven sent when you are struggling to kick start and find a way to finance a new business. To get some people interested, you have to prepare a good sales plan, marketing analysis and market assessment for your new business. You must be able to show a high level of expertise and a holistic approach on the market you want to approach. Also, be prepared to give up partial control or ownership when accept investors.

Apply for Loans

One time-tested of method of financing a new business is to apply for a loan. Still, not all business owners are approved on their loan applications. So if you’re considering this option, gather all the help you can get – consult with business lending and finance specialist to help you get better chances of approval for your loan.

Raise Money the Old School Way

Turning to your family and friends in financing a new business is a common, old-school method of raising money. When you resort to this, consider the possibility of jeopardizing your personal relationships with some of them. You have to present a formal financial projections and assessment to reassure them that they will get their money back. It also shows them that you are serious about the business and that you are taking them seriously as well.

Image Credit:
Worradmu – FreeDigitalPhotos.Net

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