Thursday, December 18, 2014

How to Create Your Small Business Budget for 2015

Three Simple Steps to Help Get a Jump Start on Your 2015 Budget

small business budget
As many business owners know, having a budget and working from it helps to maximize the chances of the business not only surviving the coming year but also increases the chances that the company will also prosper. Developing and sticking to a budget is a critical part of the business’s success, so making sure the budget for the coming year is in place early is an important step. With everything else going on at the end of the fiscal year, it can be easy to push off such an important task but there are some simple steps you can follow to help get the budget created and in place well before the start of 2015.

Compile Your Direct Costs and Expenses

Instead of just guessing at a number or basing your budget off of the previous year’s numbers, it is important to take a few key points into consideration. One of these key areas is what the business’s direct costs and overhead expenses will be for the coming year. These direct costs should include the price to manufacture your products or support your services, administrative costs, payroll, rent, and utilities for the office building or store front and other overhead expenses that will negatively affect your sales revenue. When looking at the price to produce and maintain your products or services, make sure to take into account any predicted manufacturing increases that will up the direct costs to produce.

Forecast Your Sales

Another important key to building out a successful budget is forecasting your sales. This can sometimes be difficult for newer businesses since there is not a significant sales history on which to base the figures. If this is the case, build the number based on how many units you have sold to date, how many you expect to sell and if that number is still realistic. Also, make sure to factor in the price of the products or services and if that price will be increasing for the next year. Other professionals recommend using Excel to help build out this aspect, and all aspects, or your budget and to work through each month one at a time, instead of the year as a whole to take into account the busy and slow seasons of your selling year.

Take Time to Review the Budget

The goal of a budget is to have a gross profit figure larger than the outgoing expenses - the difference between these numbers will predict the business’s yearly net profit. Let’s assume that your predicted budget does show profit – while this is great news, evaluate the number and decide whether or not it is enough for the business to survive on or the number you were expecting. If it is not, go through the first two steps again and see if there are some areas that can be cut or increased to increase your net profit. If the budget shows a loss, or going through the steps again does not yield a higher profit, evaluate whether or not your business can still manage even if it takes a loss through a period of growth. If no solution arises in any scenario, revisit your business plan and consider a different approach.

If you are still looking for an opportunity to pursue as your own small or home business, consider calling Stacy 'Quinn today! Stacy has helped dozens of entrepreneurs with his unique opportunity as well as training other work at home professionals with techniques he learned at Dani Johnson training seminars. If you would like to learn more about Stacy and to find out how he can help you, please click here.

*Photo Courtesy of Ken Teegardin via Creative Commons License

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