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Build Your Business Budget

If you've ever listened to a financial guru or done any research on personal finance, you know that one of the most important steps you need to take is to create a monthly budget. Having a monthly budget can help you rein in your spending, maximize saving, and meet your long-term goals.

But having a budget isn't just important for your personal finances; it can help your business, too.

A business budget is actually a financial roadmap or plan that shows the money you expect to take in and pay out over a specified period of time. A strong budget can help you gain financial control by –

  • Helping you monitor and reduce expenses.
  • Uncovering saving opportunities.
  • Forecasting revenue and expenses to help you plan more easily.
  • Preparing for unexpected financial challenges.
  • Helping you make more informed business decisions.

Sure, it's hard to think about adding another thing to your already-packed to-do list, but creating a business budget is actually not that hard to do.

Just follow these simple steps:

  • Add up your income. You’ll need to tally all sources of income for your business, including your sales as well as other sources of income, such as rent and investment income.
  • Record fixed variable expensesand . Your expenses include both fixed costs that are the same every month, such as your rent, as well as variable costs that change based on the activity of your business, such as your utility bills or payroll.
  • Estimate additional expenses. Consider the plans you have for your business, seasonality, and any expected changes that may come up that will result in additional expenses.
  • Determine your cash flow. Add up all your fixed, variable, and additional expenses and subtract them from your income. This will allow you to determine the cash flow you have available.
  • Set your budget. Once you know your cash flow, you can budget your money for expenses. Be sure to include saving money as part of your monthly budget.
  • Review and reassess. Your budget will be fluid; so, you'll want to review and adjust regularly based on the changing needs and performance of your business.

You can simplify this process with budgeting software programs. But, whether you use those programs or create your own, having that budget will take you to a new level of financial control and peace of mind.

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