Preparing a business budget is essential for any business owners to set establish the goals and evaluate the business achievement. It is used to track the business income and expenses. In manage rial’s point, budgeting is a tool to identify the business health, set the investment opportunity and to measure the progress.
In general, a budget includes revenue, cost, and profit, where the owner can find out any money left for capital expenses. To prepare the budget, the owner may consult with an accountant service or use financial software.
The business owner can create a monthly, quarterly, or annual budget.However, some owners only make the budget, but then leave it. The budget will work to your business if it is implemented. to make the budget works, follow these simple steps:
- Flexible. In the first year of developing a business budget , usually, the owner may face challenges. However, they can learn from their experience and make some adjustments.
- Consider to underestimate revenue and overestimate expenses.
- Cash for an emergency. Save some amount of revenue into saving the account. This saving will only be used for critical condition only.
- Set the variable expenses, such as phone bills that have different cost in each month. To determine the variable expenses, use the average of this expenses from the last six months.
- Monitor business cash flow. Cash flow problem will cause bankruptcy. Monitor the business cash regularly to ensure the cash flow is positive.
Creating budget is a key to reaching the business success. This crucial tool enables the owner to track cash, expenses, and revenue to develop business. It also alerts the owner to any problem occurred before getting worse. Creating monthly business budget is a complicated task which needs the discipline to implement it. However, it is a vital project tool to monitor your financial decision and keep your business in its track.
