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Sample of our how to create a business budget for your business template:
HOW TO CREATE A BUSINESS BUDGET FOR YOUR BUSINESS A business budget will help you assess your expenses, income, and the overall performance of your business. Additionally, having a strong business budget in place can help you cut unnecessary costs and avoid falling into debt. As such, this document aims to provide effective tactics that will help you create a precise business budget. Calculate Your Estimated Revenue Your estimated revenue is the amount of money you expect to make by selling your products or services. It is the amount of cash you bring inside the door, irrespective of what you have spent to get there. Calculating the revenue is the first step in preparing a budget. The estimate can be based on the previous year's numbers, or it can be based on industry averages. Calculate Your Fixed Costs Some costs in your business are regular and consistent, like mortgages, insurance, utilities, bank fees, fees for accounting and legal services, and equipment leasing. These costs do not change according to how much money you make. So, know your fixed costs and calculate them into your annual budget. Know Your Variable Costs Variable costs are those that change according to the production or sales volume. These costs are closely related to your seeking prices, meaning anything related to the production or purchase of the product or service that your business sells. Variable costs consist of raw materials, inventory, production costs, packaging, and transport. Sales commission, credit card fees, and travel charges also come under variable costs. Your budget plan should outline how much you expect to spend on these costs. Know Your One-off Costs One-off costs include all the work that doesn't come under the usual work that your business does-costs like shifting offices, equipment, furniture, and software, and related costs. If your business has just been launched, one-off costs must be included in your budget. Monitor Your Cash Flow Cash flow means all the money that travels into and out of the business. If you have more money for your business over a specific period than the amount of money going out, it means that you have a positive cash flow. Monitor your cash flow as frequently as possible because it is the oxygen for your business and a vital factor to consider when planning a business budget. Calculate Your Profit After deducting expenses from your revenue, what you have left is your profit. Increasing profits mean that the business is growing. Based on your estimated revenue, expenses, and selling prices of goods, plan how much profit you intend to make. If you aren't where you'd like to be, re-examine the cost of goods sold and consider increasing prices. Negotiate Costs with Suppliers This is a crucial step for a business that has been operating for more than a year and relies on suppliers to sell its products or services
