You realised the importance of creating a budget for your business, you’ve had a think about what you would like to include and you have downloaded our free budget template! Congratulations on being such a business owner Wiz!

Didn’t get the template yet? Check it out here 

Not even sure you need a budget? Get the lowdown here (Spoiler; you absolutely need a budget!)

Now what?

I get it, it can be hard to start! Where? Why? How? Lets take a deep breath all together! I have outlined below four easy to follow guidelines of creating a business budget. You will be in the 40% of business owners who have a budget in no time! Que strong financial future!

1. Goal Setting

The foundation of any budget is solid business goals and performance metrics. These are the measures you will use to see the gaps between how your business is currently performing and how you want it to be performing! You will therefore need to create some financial goals. However it is also important to think about other non-financial goals like operational or customer orientated goals. For example, if you want to expand your product offering, however financially you also want to cut expenses, then immediately you can see that these goals may be in conflict with each other. Launching costs money, so you cannot expect to cut expenses and grow at the same time. This is why it is crucial to consider the wider business goals not just the financial goals.

2. Revenue Planning

Revenue planning is largely going to be focused around your revenue goals identified above. Is it a 5% increase in revenue? Is it opening up a new stream of revenue? Is it increasing the number of purchases by x%?. It can be either of these or a combination. The most reliable calculation will come from calculating units sold. For example you may be able to calculate that increasing your number of monthly sales volume will lead to an increase in revenue by X and so this will be your revenue projection. Alternatively you might like to decide on a % increase above last year.

Whatever it is, decide on a total revenue projection for your business and include this in the revenue section of the budget template. Remember to select a time frame and a start month. If you would like to add a flat revenue of say 5 thousand per month, and then also add in an additional 2k per month in certain months, eg. maybe your sales increase over the summer. Add each item as a “One-Time” amount.

Tip:

• Be realistic! Unless you are making significant changes to your business a significant revenue increase just may not be realistic.

• Try to be as accurate as you can be, if you are unsure air on the side of underestimating revenue and overestimating expenses. 

3. Expense Management

Download a list of all your expense accounts from the previous 12 months and go through every item line by line. If you have a significant number of transactions decide on a limit of transactions you will review. Eg. Transactions over $500. Add essential items into the budget template remember to select an account type, start date and time period for each expense.

Tip: Don’t forget to include an allocation to pay yourself!

4. Review

Head over to the budget summary tab to review all your input along with your goals for the year ahead. What do you notice? Are you making a profit this year? Maybe you aren’t because of significant business expansion. Maybe you are making too high of a profit and you can afford to invest more into growth. Move revenue and expense allocations around until you feel comfortable with the final output.

Congratulations! You are all done!

Remember to revisit the template regularly to ensure your goals, spending habits and revenue are still in line.