64: Simple And Easy Way To Create A Budget Whether You Are Starting A Business

64: Simple And Easy Way To Create A Budget Whether You Are Starting A Business, You Are Self-Employed, A Solopreneur, Entrepreneur, Small Business Owner, Remote Virtual Online Bookkeeper, Virtual Assistant Or VA

I’ve been getting quite a few messages from business owners saying that they are struggling to create a budget for their business. Some are just getting their business up and running and others have been in business for a few years. Either way, having a budget for your business is will allow you to dictate how you want your money coming in and out of your business to flow. When you don’t have a budget, it is easy to lose track of your numbers or your goals for the year. I often hear business owners say it is hard to create a budget, or they don’t know where to start. In today’s podcast episode, I am going to dive into how you can easily create a simple budget for your business and how you can get started. It doesn’t have to be hard, and it doesn’t need to take a long time when you know what you need to do in the first place. So, whether you are using a computerized software system like QuickBooks, Xero, Wave or FreshBooks for your business finances, or if you are doing your bookkeeping manually with an Excel spreadsheet or even a Google Document, knowing how you can create a simple and easy budget for your business will help you stick to your goals and allow you to track exactly how close you are to your original budget numbers. Whether you are just getting started with your business, you are a self-employed individual, a solopreneur, entrepreneur, small business owner, remote virtual online bookkeeper, virtual assistant or VA, you want to take the time to really look at your numbers, create a budget and use your budget as a compass to help guide your finances throughout the year…

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Show Notes:

Welcome Back…When you hear the word budget, how do you feel? Do you feel like creating a budget would be too hard? Do you feel budgets are difficult to understand? Do you feel like your business is too small to even have a budget? Well, today I am here to tell you that you don’t need to think creating a budget is hard or difficult to understand, and even if you have a small business, it is recommended that you still do a budget to keep you on track.

First, let’s start off by talking about what a budget actually is. A budget is simply a projection of how you would like to see your money coming into and out of your business. It is a plan for how much you are anticipating your income and expenses during a certain period of time.

I understand that just getting started with a budget when you don’t really know how or what you should be doing can be a bit frustrating. Today, you are going to get some tips to easily create a simple budget for your business that will help you stay on track for the year, and right now is the best time to make sure you have this budget in place so that you can start the new year off on the right path.

Budgeting doesn’t have to be hard, and just like anything you do for your business, the hardest part is to just get started. The first thing I want you to do for your business is to make sure that you have your bookkeeping up to date so that you know what your income statement or your profit and loss report is for this last year. If you don’t have your bookkeeping up to date, this will be the first thing you want to work on. You will need to have this information available to you anyway when you get your tax return done, so why not get it done now so that you not only know how your year is going so far, but you are also able to utilize this information to set up your budget for the next year. If you don’t feel like you can get your bookkeeping up to date, you may need to hire a bookkeeper to help you with this. I recommend you have your bookkeeping done on at least a monthly basis so that you can make sound business decisions based on your financial information. If you need help with your bookkeeping, I’d be happy to help you make sure you have this task covered in your business.

The next step is to take your income statement or profit and loss report and use these numbers to help you create your budget. You don’t have to start from scratch if you have been in business, and you have already incurred income and expenses. It is much easier to take a look at what has happened in the past and work on those numbers to get your new budget in place. I recommend looking at your income statement or profit and loss report by month so that you can see the breakdown of your income and expenses by month. If you are using a computerized software system like QuickBooks, it is easy to export your income statement or profit and loss report into a spreadsheet like Excel and then work on your budget numbers right in that spreadsheet. If you don’t use a computerized software system, you can always use your latest income statement and create your budget on a piece of paper. It doesn’t need to be fancy; you just need the budget to reference how you are doing throughout the year.

Let’s take for example you are looking at your income statement or profit and loss report and you need to budget for your insurance. You may see on your income statement that you have incurred insurance expenses of a specific amount each month, or maybe you are paying your insurance expenses every six months or once a year. By looking back at your income statement, you will know exactly when you are going to incur these expenses again. Now, the only thing you need to do is to adjust these numbers for the upcoming year. If you think the expenses will be going up, your budget will need to reflect this higher expense. If the expenses will be going down, you can enter those lower amounts in your budget in the exact month or months you know you will be incurring your expenses.

Continue with each and every income and expense item you have on your income statement or profit and loss report. Once you have gone through each item, and you have adjusted the amounts to what you are anticipating for the next year, you have created your new budget. This doesn’t sound too hard, does it? Now that your budget is created, you can compare your actual amounts to your budget. I recommend looking at this on a monthly basis again. When you do this, you can see if you are over or under spending in a certain area and this will help you to make any adjustments throughout the year to keep you on track for meeting what you have budgeted for the year.

You might be thinking that this is all simple and easy, if you have been in business already and you have an income statement or profit and loss report to look back on, but what if you are just starting your business, and you don’t have any data to look back on? Well, then all you need to do is grab that piece of paper and start by estimating where you think your income will be for the upcoming year. Once you do this, you can then work on all the expenses you believe you will incur as well as when you will incur them. I know this may seem a little harder to do, but I want you to know that your budget doesn’t need to be perfect from the start. You can always revise your budget along the way. Don’t look at your budget as something that is set in stone, and if you don’t me