If you’re somebody who prefers doing things the traditional way then gather a couple of pens and notebooks for you to start writing a detailed your budget requirements in a detailed manner.
However, technology has undoubtedly made life easy for many in various aspects and a software like Microsoft Excel can be a user-friendly option. In fact, it may be a tad bit more useful than going forward the traditional way since saving documents on a gadget that is difficult to misplace- such as your laptop or computer- can come in handy.
However, the phrase “to each their own” does come into play here so it is important to choose a method that helps with your budgeting in the way that seems most convenient to you.
Make A List Of Your Costs/ Expenses
Once you’re ready with your tools, list down every aspect of running a business that needs investment, even if it’s something as basic or small as stationery. Prioritizing them from most important to most general can be a good idea. Some costs can be termed assets while the others can be called expenses.
Let’s have a look at your assets: These can include costs like real estate, furniture, gadgets, etc. Your assets aren’t usually tax deductible.
Let’s now take a look at what may be your expenses: Costs like payroll and rent/lease will fall under this category and are tax deductible.
Other costs may include those for your website, marketing , design, etc. that is a good idea to include in a separate list.
Figure Out Your Fixed Costs
Fixed costs are those that do not change on a regular basis because they do not depend on production and sales volumes. Things like rent or lease, payroll expenses, telecommunication expenses, advertising and marketing expenses, insurance, payment of subscriptions, etc.
Figure Out What Your Variable Costs Are
Quite the opposite of fixed costs, variable costs are those that fluctuate as per an increase or decrease in your levels of production. The best example of a variable cost is the raw materials that one purchases to run a business. Apart from that, a few other examples include sales commissions, electricity, direct labour costs (employees who work in the production unit and not administration or other departments of a company).
Monthly Revenue And Break-Even Point
Every business owner looks at earning a profit and if one doesn’t determine his/her budget and expenses appropriately then it can be difficult to achieve what one is looking for. After figuring out your costs, the next step is to estimate your monthly revenue and ROI in order for you to understand when you will reach a point when you start earning a profit. By figuring out your budget and investing it in the right areas, you may be able to reach your break-even point as per your estimation and desire.
Where Can You Get The Funds That You’re Looking For?
It is known that most start-up business owners have around $50000 or less in their bank account, which may or may not be enough to help fund their business. In case it isn’t, applying for a loan is the best way to go about it.
However, it may be a little difficult for an SME to get a small business loan from a bank which is why they can choose to opt for online business loans. Many online lenders offer amounts that are good enough to cover all your expenses and getting a loan from them is way easier than getting one from a traditional lender.
To start with, many of them do not consider bad credit as a reason to deny individuals a chance of getting funded by them. The requirement for collaterals is also not a part of their eligibility criteria which is a huge plus point considering the fact that most traditional lenders do ask for some kind of security in order to provide you with the financial assistance that you need.
However, the rates of interest of such loans may be higher that what may be offered by a bank, but the chances of getting approved and fast is also way higher.
By taking into account the factors listed above, you can plan your budget requirement in a satisfactory manner and understand what investments are most crucial for your business, at least in the beginning. For a start-up, you may want to consider putting a halt on fancy decorative items or other things that aren’t essential to avoid taking a bigger risk than is already involved in starting your business, but without a doubt, the decision is yours.
Take out a few days to figure out your costs and revenue and you will undoubtedly be good to go!