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Setting a Budget

Posted by Nicole Balchin on 19 July 2018
Setting a Budget
Creating a Business Budget

We are well and truly into the New Financial Year Have you set your budget for the next year yet? Or are you like a lot of small business owners that just don't know where to start?

Answering these 3 simple questions will tell you how to direct your money and where it is needed the most.

Are you making a profit?
Do you have enough money to grow your business?
Are your business expenses to high?

1.     Timeframe
        Choose a timeframe for your budget - monthly quarterly or yearly, however, we recommend monthly and for the current financial year.

2.     Fixed Costs an expense or cost that does not change over the short-term.
        Enter all your fixed expenses like salary, rent, insurance etc.

3.     Variable Costs are costs that changes in proportion to the goods or service that you are producing. Such as utilities, materials, staff wages,
        distribution costs.

* Fixed Costs and Variable costs make up the to components of TOTAL COSTS.

4.     Enter your expected business income over the chosen budget period only. Making sure to giving you some room to move in case things change.

5.     Actuals costs that have happened opposed to things you had planned.        
        Record your actual income and then calculate the difference between what you budgeted and the ACTUAL income and expenses.

6.     Analysis throughout the budget period make sure you are tracking against your budget. You'll be able to see where your spending to much, and
        therefore you'll need to look for ways to cut costs. Make sure you are getting the best deal on expenses. Expenses are necessary to run or growing
        your business - focus on lean but don't cut expenses so much they stifle growth Have extra funds? Use this to reduce debt, thus creating a financial
        safety net or use it to grow your business.

Good luck and remember - having a trusted advisor such as an accountant or bookkeeper will spot opportunities you could possibly miss... !

Nicole BalchinAuthor: Nicole Balchin
Tags: Bookkeeping Enquiry

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