Every business needs a budget to adhere to maintain profit and overall success. Spending beyond this budget can be detrimental to short and long-term financial goals. Having a clear business budget is the first key to sticking to it. This includes knowing your needs and having your priorities set. Though outgoing expenses will vary from business to business, there are some things that are common and practical for many types of businesses. Here are just a few items to include in a business budget.
Some types of businesses require industrial or manufacturing equipment and some simply need office items and computer hardware to operate successfully. First, make a list of what you need to start and maintain your business. Do also consider what you can lease or outsource to another business. Once you understand your needs, you can begin to contact different suppliers and shop for quotes. Keep in mind, you might be able to get better pricing if you consider packages or working with one company. You can also learn more about what equipment you need based on other businesses in the same industry.
Whether you need actual equipment or not, supplies could be a huge budget eater for certain types of businesses. Some examples include creative companies that create home goods, food products, crafts, and those that provide services. In many cases, you can qualify for wholesale pricing with suppliers if you plan to resell items. This can definitely improve profits and save a good portion of the business budget.
Do you plan to have a warehouse, office, or retail store? Regardless of the size of your business, unless you operate out of your home, you will need to include space rental costs in your budget. Keep in mind, there is more than one cost item to consider with your premises, too. If you want to buy property, you will need insurance, maintenance, and security, as well as money for property taxes. Though some rental situations include upkeep fees, you want to have some money on hand for emergencies and expenses your landlord does not cover.
Though you might be a one-woman show at the moment or operating with minimal staff, labor costs are an important consideration for a growing company. Budgeting for new staff is one thing to think about, as you want to have the money to grow when the time comes.
In addition to staff salaries, consider what benefits, healthcare, and other amenities will cost your business. Additionally, if you plan to have a reward or bonus system in place, include this in your annual budget.
Your business budget is so important to help keep your vision alive and growing. Catering for your business and minding your spending are ways to discipline yourself to look at the bigger, more long-term picture. Remember, if you are not sure what you should spend on each area, you can always consult with a business coach or financial planner for a detailed plan that suits your company goals.