The year 2017 will be over before you know it; therefore it’s time for you to prepare your business for 2017 finances. When a verity of factors determine the failure and success of your business, your ability to create and follow the budget is imperative for its endurance. Your 2017 budget can help you:
- Count on cash inflows and outflows
- Get ready for tax obligations
- Knowing your financing requirements
- Discover growth opportunities
- Weigh your business’ performance
It is also worth noting that according to the Small Business Administration (SBA); normally half of small businesses fail within their first 5 years. Smart small business budgeting now can come up with a good idea at clearing that obstacle.
Here are five simple budget planning steps for small businesses to follow.
- Review Your Last Year Budget
After starting your small business budgeting for 2017, you need to review your last year budget. Evaluate each and every aspect to determine how closely it matched your small business’ real earnings and expenses. This will offer you a solid starting point for next year’s modifications.
In case you’ve never made a business budget before, there are so many online resources available, such as SCORE’s Financial Planning Templates that you can download and personalize.
Project Your Earnings
Create a sensible estimation of how much amount of money you expect to bring in each month. In case you are just beginning, talk and discuss with other business owners to look if they can give you an idea of how much you can expect to make during your first year of operations.
Knowing how much money you expect to bring in is very significant for two reasons;
- Overestimating or misjudging can cause overspending and profligacy and quickly put your business at risk.
- Underestimating may keep you from investing in new products or projects, workers or marketing and get in the way of your business growth.
- Add Up Your Expenses
Once you understand your cash consumption, start evaluating your fixed expenses, such as:
- Rent or mortgage
- Employees’ payroll
- Business insurance
These expenses may vary from year to year, generally your tax obligations. As a general rule, certified public accountants often suggest reserving about 25-30% of your earnings for the quarterly taxes. Check out the IRS Small Business Tax Center for more details.
In the end, plan ahead for these things that can add up quickly and disrupt your overall budget:
- Office resources
- Fuel and maintenance expenses for company vehicles
- Postage and shipping costs
- Entertainment costs, consisting of client lunches
- Membership dues for professional associations
- Professional development costs consisting of subscriptions to industry magazines or fees to attend business conferences
In case you start observing that your expenses are creeping close to your expected income, now is the time to start working out where you can make cost reductions. Check out these beneficial pointers on the way to reduce some common office expenses.
- Plan For Unexpected Expenses
These are the unexpected expenses. Consider possible troubles that your small business may experience, for instance:
- A damaged equipment that needs to be repaired or replaced
- An increase in increase
- Business vehicle repair
These expenses can disrupt your overall business budget if you don’t plan in advance, so you need to make certain that you reserve some cash to cover miscellaneous costs.
- Review Your Budget Once A Month
To keep your small business running well on the right track, you need to check out your business budget every month so that you can make any important adjustments.