Budget
What is a budget?
A budget is an overview of all the income and expenses associated with your business. This is current and expected income and expenses. That way, the budget can give you a sense of what your financial situation is right now and what it looks like in the future.
With a budget, you can show others what you expect your business to be worth by showing expected sales and expenses for the coming year.
Why is a budget a good idea?
With budgets you get an overview, there are many numbers to keep track of and this is best done in a budget. That way, you avoid losing track and you discover unforeseen expenses sooner. In addition, you can keep track of your business when the goals are set.
It is a good idea to make several budgets so that you keep things separate, such as personal finances and the company's finances. But also, the various departments in your business. You get an insight into where things are going well and where things are not going so well and thus need to have your extra focus. For example, if you use a lot of money on Facebook ads, but no similar revenue comes in.
Do you have to make a budget?
No, there is no requirement to make a budget, but it is a really good idea. However, several banks and other lenders make it a requirement. The reason for this is that a budget provides an indicator of how the company is performing. At the same time, it is often a requirement when you have to take out a loan, as banks will not grant loans without a thorough overview of costs.
But if your bank does not require a budget or you do not have a loan in connection with your business anywhere then it is entirely up to you. If you can manage the many numbers yourself, there is no need to spend time entering it into a budget.
We recommend it though. Although you can keep track of it all, the problem can arise when you have to pass on the financial work to someone else in the company or you have to take out a loan, here it will be a big job to post months or even years back.
Operating budget
This budget gives you an overview of your operating expenses so that you can follow your financial development.
As a member of Startup Central, you are free to download and use the operating budget.
Establishment budget
This budget gives you an idea of what it will cost to start your business.
As a member of Startup Central, you are free to download and use the start-up budget.
Liquidity budget
This budget is used to strengthen your future actions from a financial aspect.
As a member of Startup Central, you are free to download and use the liquidity budget.
How to make a budget?
Find a template that suits you. We suggest the above. Here we recommend that you prepare a template for a year, as it is not all expenses you have every month, some only come once a year.
- Fixed expenses and income
First you enter all the fixed income and expenses - the numbers you are sure of are there every month, quarterly, semi-annually or annually. Divide your quarterly expense by three, so that you divide the quarterly expense into three months, the same applies to the semi-annual and annual. That way, they have a fixed total expense each month, while ensuring that when the annual bill arrives then there is money for it. - Available amount
The rest of the amount left when your expenses are deducted from your income is your disposable amount. This is your merit for your hard work with your business.
We recommend that you set aside some of this money for unforeseen expenses, there is always something you can not foresee and it always shows up at the most inconvenient times. Therefore, it is nice to have a sum of money lying around so you do not have to worry about whether you can pay the bill.
- Ensure balance
Always strive to have a plus in the budget, or at least 0. The golden rule is to spend less money than you earn, however, this can be difficult when you are in the start-up phase of your business. Here you need to think alternatively, maybe there are areas which are expensive, that you can work on yourself, such as marketing - read more about this here. - Keep an eye out
Make sure to keep an eye on your expenses and income at all times and adjust your budget accordingly, that way you are always up to date so that nothing unforeseen comes. For example, if a fixed expense increases. You can update regularly or set a day off per week where you check up on whether everything is as it should be, this does not take long if you take it regularly, however it may take a long time if it is not done.