No matter whether you’re a new small business owner or the head of a home looking to manage your finances better, compiling a monthly budget is one of the most critical tasks you’ll undertake. Coming up with a simple budget requires a bit of work, but it’ll pay tremendous dividends in the future.
Budgets serve as a financial roadmap. Not only can they help you understand the future of your small business or personal finances, they can also hold you financially accountable. The expenses of one home or business may vary significantly from that of another, so it’s essential that you come up with a budget spreadsheet that suits your needs.
Fortunately, we’re here to help. We’ve provided you with an outline of a few of the benefits that come from crafting a monthly budget. Then we included a few budget planner tips to help you start planning. Finally, you’ll find a free budget template. Whether you need a budget tracker for your small business or to use as a personal money manager tool, you’ll likely find our free budget template worthwhile.
The importance of a budget
Taking the time to sit down and compile a budget worksheet is useful because it allows you to figure out how much money you have, how much you’ll spend in the coming months, and how much income you need to meet your financial goals. Completing a budget sheet is critical, not only for personal finance but for small business owners as well.
Personal financial budgeting
It doesn’t make any difference whether you’re looking to set a family budget or are a college student worried about how to pay your loans — budgeting can help you meet your personal financial goals. Budgeting allows you to analyze your cash flow and expenses, holding you accountable each week and month. By doing so, you can work toward earning your financial freedom.
Consider the fact that roughly two-thirds of Americans indicate that they would struggle to come up with $1,000 in case of an emergency. Additionally, the average American carries $6,375 in credit card debt. Lastly, around half of Americans with student loans express concerns about their ability to pay off the debt.
Setting a home budget allows you to meet your financial goals. Are you looking to set money aside for your children’s college plan? Would you like to begin saving for a home? Do you need a wedding budget to help pay for your big day? Would you like to start paying off debt and escaping the trap of high-interest loans? A personal budget will provide a roadmap of what you’re permitted to spend so that you’ll meet your financial goals.
Budgeting for small businesses
A small business budget is usually a vital component of the business plan. If you’re applying for loans or pitching to investors, providing a monthly budget spreadsheet will be helpful. Small business budgets explain how your business will spend its resources to reach its goals.
Business owners should always refer to their budget before making critical expenditures. For instance, decisions, like purchasing new machinery or expanding into a new store, should only be made after checking to see that it fits your budget. You can adjust variable expenses of your budget as needed over time, to help offset your expected change in cash flow.
Budgeting is particularly critical for a startup business. Many new business owners underestimate business start-up costs. They may have to take out first-year business loans with high-interest rates so that they can meet their monthly costs.
New business owners may want to use a small business budget template to break down expenses into two categories, “One time” and “Monthly.” If a new company does not have to take out small business loans, it will have much more working capital on hand, which could help grow the company.
Tips for budgeting
When creating a budget, there are a few things you should keep in mind. To start constructing your budget, review your expenses from the past couple of months. Then, come up with budget categories to arrange these expenses. For instance, when constructing a personal monthly budget, consider budget categories like:
- Groceries
- Gas and Vehicle Expenses
- Clothing
- Cable
When creating a small business monthly budget, consider things like:
- Employee Salaries
- Insurance
- Interest Payments
By reviewing your expenses, you can determine what’s essential to your weekly budget. You should also be able to decide on some of your variable expenses as well. Your variable expenses are non-essential items where you have flexibility. For instance, instead of spending $300 per month to eat out, you can limit yourself to $100 when constructing your budget template.
You should also include your financial goals as a budget category. Say, for instance, that you’d like to pay your student loans off more quickly than anticipated since they have a high rate of interest. You budget to pay an additional $50 of student loan debt per week. Create a budget category for “Student Loan Debt Payments.”
Since your goal is to pay off student loan debt, your “Student Loan Debt Payments” would be a non-variable expense. A non-variable expense is one in which you have no flexibility — you’re committing to this expense. So, in this case, going out to dinner would be a variable expense, while paying off debt is a non-variable expense.
Once you’ve figured out your expenses, you should take a look at your cash flow to determine how much money you’re bringing in. Be sure to use your actual income when creating your budget, not how much you expect your income to be in the future. The beauty of using a monthly budget template is that you can quickly adjust for changes in cash flow at any time. Business owners should carefully analyze key financial documents, including:
- Financial statements
- Cash flow statements
- The balance sheet
- Financial projections
When constructing your weekly budget, it’s in your best interest to leave yourself an few extra dollars per week that’s unaccounted for. If you don’t end up spending this money, that’s ok. You can put it into a bank account and allow it to grow. But, if something were to come up, you can rest assured that you can still meet your budget without having to stress.
We recommend creating both weekly budgets and monthly budgets. This allows you to view the “big picture.” Your primary goal should be to hit your monthly budget. If you don’t have much experience budgeting, following a weekly budget provides you with an excellent roadmap to do so. Adhering to your weekly budget is a sure-fire way to ensure you meet your financial goals each month.
Related:
- How to create a website for my business: 8 steps and tips
- How to start an e-commerce business and succeed in 2023
This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.
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5 tips for organic business growth
It’s no secret that startups have a prodigious failure rate. In fact, according to a recent Entrepreneur.com study, the four-year survival rate for a startup is just 49%.
With demoralizing stats like this in mind, entrepreneurs may be tempted to grow their profits through any means necessary, including inorganic strategies like acquisitions or mergers. However, the truth is that business owners can achieve impressive growth through organic strategies as well, allowing them to retain control of the companies they built from the ground up.
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Also known as “true growth,” organic growth refers to the process of growing a business by reducing costs and increasing sales, either by finding more customers or enhancing output to current clients. On the other hand, inorganic growth occurs when a company merges with or is acquired by a second business. Entrepreneurs should take the time to familiarize themselves with the advantages of organic and inorganic growth, as well as some of the top strategies for execution, so they can decide which is the best choice for their business.
As a new business owner, you’ll likely want to increase profits as quickly as possible. By employing inorganic strategies like mergers and acquisitions, startups can grow their businesses more quickly while taking advantage of resources such as stronger credit lines and expanded market resources. Additionally, joining with another company lets you take advantage of its expertise and experience in the industry to develop your own brand.
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By merging with another business, you agree to hand over some of your control and equity to another company. Not only can your initial vision become diluted, but you may also be forced to take on new business and managerial challenges before you’re truly ready. In some cases, you may have to rush to grow your staff and production capabilities to keep up with demand.
On the other hand, organic growth techniques allow you to grow your business on your own timeline. Because you aren’t sharing control with another company, you can hire employees and expand sales at your own pace. Additionally, entrepreneurs who maintain their autonomy now can sell for a larger profit later when the company is fully developed.
While retaining control of your company offers many advantages over the long haul, it can make business growth challenging in the short term. Some entrepreneurs struggle to grow beyond their current marketplace, while others find themselves cut down by the competition. Additionally, new businesses must often fight to make ends meet from month to month. Fortunately, strategies exist to help startups grow their profits without handing over control to partners or investors.
Here are just a few of those strategies to help you grow your business organically:
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Want to grow a business that will feed your family and employees for years to come? The first step on the road to entrepreneurial success is starting the right kind of company.
With home-based and e-commerce businesses, you can avoid expenses like rent and commuting during the early, lean years of your company. As an added bonus, working out of the home lets you write off parts of your mortgage and electric bill. You can then invest these savings back into the business to help you grow in the long term.
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A common conundrum for new business owners is whether to take your full cut of the profits or invest the money back into your company. While you may be tempted to keep some of those hard-earned dollars for yourself, you should aim to reinvest gross profits whenever possible to help your business grow. Investing your own money shows prospective clients and lenders that you are confident in your company’s long-term potential.
Not sure where to put profits? When in doubt, invest in marketing, SEO and other tactics likely to generate more business for your startup. If your income permits it, you may also want to invest in employee training and technological improvements, as these can yield large profits down the line for your company.
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No matter how happy your current clients are with your offerings, you will have trouble growing your business organically if you don’t put effort into finding new sales channels. If you don’t currently sell your goods online, you should definitely consider starting a website to expand your reach to other regions. Additionally, you can introduce new products, cross-market services to your existing clients and expand to different markets. For example, a company that specializes in SEO may want to expand its services to include social media and search engine marketing.
Finally, business owners should employ market segmentation to customize their strategies according to the specific channels they are leveraging and the specific markets they are trying to reach. This way, you can create unique campaigns based on customer location and demographics and watch your sales rates skyrocket.
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As a new business owner, you may feel the urge to micromanage everything that happens at your company. However, the truth is that macro-management is a far more effective way of enabling organic growth for your startup.
To keep your company moving forward, you should train top employees to take over some of your daily responsibilities. While you may be tempted to keep costs down by hiring employees who will work for less, in the long run these staff members could end up costing you more if their efforts aren’t up to par. Find people you can trust to get the job done—even when you’re not around—so you can focus on growing and developing your business in the years to come.
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From minimizing spending, to reinvesting profits back into the business, organic growth strategies help ensure that you will retain control of the company you worked so hard to build. Do your research, and consider all the growth strategies available in order to give your business the best shot at success.
Do you know how sales taxes are impacting your bottom line? Check out our sales tax calculator.
This article originally appeared in the QuickBooks Resource Center and was syndicated by MediaFeed.org.
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