Thursday, September 15, 2011

How to Create a Small Business Budget

If you run a small business, it is important to create a small business budget to help control and manage your finances. Not only will this save you time but it will also help you to save money by being more aware of income and expenditure, and exactly how that expenditure is being deployed.

A very important aspect of any business, whether a large multinational corporation or a one-person home business, is to keep tabs of where money is being spent and be aware of why such expenditure was necessary. It is not as difficult a thing to do as many people believe, particularly if you choose the right tools to help you, and the cost involved in acquiring it will be saved many times over through good financial management. In saying that, there are many excellent free financial packages available that will help you with creating your budget.

The first step to setting up any budget is to open a spreadsheet. Although you could use a simple Excel spreadsheet, it is better to use a good accountancy software application such as Intuit’s Quicken or QuickBooks Pro Financial Software although you can also use any of the free Microsoft budget templates offered such as the Start-up Expenses Worksheet or Marketing Budget Plan templates.

When you are formulating a business budget, be sure to make allowances for unexpected expenditure. If you fail to do that, it is possible that you will be caught out, and once your budget goes off track you may find it difficult to get it back again. Always include some flexibility in any budget you create.

It's strange how many people who own their own businesses will be scrupulous at home trying to reduce their personal bills, such as power bills and service providers, yet when it comes to their business they accept what they are charged. Try to get the cheapest provider you can for your communications such as telephone and internet services, and use the least expensive power supplier you can find.

If you find it less expensive to combine your telephone and internet providers then do so - you might even get your satellite TV included. Why do more businesses not use the free VoIP services available online for their telephone systems? Skype is free and enables you to carry out video teleconferencing worldwide - with free calls to other Skype users and reduced-price calls to landlines, it's a no-brainer for any business.

You can often reduce insurance expenses by negotiating discounts by combining your personal and business policies or taking them from the same insurer. If you buy your life insurance, personal and business liability insurance, auto insurance and accident insurance all from the same provider, you will have a very powerful negotiating platform from which to secure a very good deal.

Savvy businessmen and women review their budgets regularly, and adjust them to cater for the unexpected. If you find yourself straying out of budget find out why and cut costs elsewhere to compensate. A financial budget for a small business must be maintained - you can't just promise yourself to better next time! They need not be fixed, and are open to change, but you must try to meet the plans you set yourself at the start of the year or whatever period you are working to.

Another useful free business template is the Microsoft Expense Budget Worksheet. Quicken Home & Business is particularly useful for home-based entrepreneurs since it enables you to manage both your home and business budgets in the same package. Quicken Online Free is another free application for personal finances. There are many more software applications available that can be used for your business and home budgets.

Do not underestimate the importance of a good small business budget because it can make the difference between success and failure. You can use any of those applications recommended above to look after your financial planning, and there are also many more online from which you can choose.

AUTHOR

Michelle Jones is the Managing Partner of B & M Financial Management Services, LLC, a full services accounting and financial support firm, specializing in small business consulting, accounting services and financial support services. To learn more about creating budgets for your household or business or any other services visit us online at http://www.bmfms.com.

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