All businesses need to budget, but it is particularly true of small businesses because margins are often tighter and there are usually less funds available to juggle with.
Managing a small business budget is key to any success you'll achieve as it is the tool you will use to apportion all of the firms resources.
So where do you start? Keep it Simple.
Although it is important to include all relevant information, don't over complicate things; all a budget is is a projection of what you are likely to earn and spend in a fixed period of time.
Keep it Real.
Be realistic about turnover, profit and expenses.
Don't overestimate your sales or underestimate your costs, it is important to be honest with yourself about what's needed.
Consult and Review.
Before you start, review last years figures and where possible collect some historical data, although only a guide, previous years data will help your future projections.
Also include others in your process, any staff or partners who have a relevant take on a related area should be asked for estimates, comparing them with your own will give a much clearer picture.
Be Thorough.
Include all necessary information, however long it takes to compile, remember to include projected sales and direct costs of things like materials as well as fixed costs or regular overheads such as mortgage and business rates, amenities and marketing.
Many types of accounting software include budget planners and this can be a useful tool for ensuring that nothing is missed out.
Be Flexible.
Use historical data and sales forecasts as a guide only, and remember to factor in changes in the market as well as all variable costs.
Remember that a decrease in sales will mean less revenue coming in but that your variable costs will at the same time go down and visa-versa.
Be primed for changes to your business and to the market and be prepared to update your budget accordingly, try not to think of it as set in stone on completion.
Your business budget will be vital for spotting things like potential cash flow problems and tackling them before they happen, and will allow you to plan not only for the day-to-day running of your business, but also for its long-term future.