5 Things You Must Include in Your Small Business Budget

1-800Accountant offers up the 5 things every entrepreneur should include in a small business budget.

1-800Accountant offers up the 5 things every entrepreneur should include in a small business budget.

To build the foundation for a small business with a good chance of experiencing future financial prosperity, it is critical to develop an effective and appropriate budget for it.

These 5 items are absolute musts to include in your small business budget:

1) Costs related to your business infrastructure

The overall infrastructure of a business revolves around where it is housed and the entire operations of how it runs. This could refer to a home-based business you run out of a back bedroom. Or, you might be doing business in a retail shop in the downtown section of your local city. You could also own or rent out office space to help separate your personal and business activities. The good news with a home office is that you can minimize your overhead expenses by not having to move into a high-rent location. The home office deduction is in the mix for this, too. However, it’s often well worth it to be seen from the road. In many instances, small businesses start out in someone’s home and eventually expand into a larger location. Just be sure to take these possibilities into consideration when crafting your small business budget.

2) Expenses for equipment, supplies, materials, etc.

The tangible pieces of equipment and items you use to run your business, along with intangible services, should represent an integral part of your financial plan. You certainly want to have the latest and greatest goods or services to operate your enterprise with, but at the same time, you don’t want to break the bank buying them. So strike the right balance here. Common expenses in this part of a budget include computers, printers, tablets, fax machines, desks, cloud-based services, and even manufacturing costs if you produce and sell goods. It’s wise to shop around for all of these business necessities, and don’t hesitate to negotiate under the right circumstances.

3) Marketing expenses

Starting a business requires at least some marketing. And good marketing is rarely ever free. You might choose to buy ads on Facebook, Twitter, or LinkedIn for your small business. You might even turn to more traditional forms of marketing like newspaper/magazine ads, TV commercials, or radio spots. No matter how you choose to promote your offerings, make reasonable calculations on what your marketing expenses will be. Only spend a good amount of money on methods you know will work, and test out others by spending a little here and there to see the results.

4) Payroll costs

Payroll is important for any small business, even if you work completely independently as a one-man band. Your employees or contractors must be compensated fairly for the hard work they perform for you, and you as a small business owner must reap some financial benefit from your own duties as well. Account for any health insurance, paid vacation, or other perks you plan to offer those who work for you.

5) Projections on expected revenues

Most of us rightfully view a budget as a guide to how much money we can afford to spend and what we need to spend it on. But accounting for the money you expect to earn in the future should be included in your small business budget. You obviously need a decent cash flow to pay for initial and ongoing expenses. Unless you have tons of startup capital in your bank account, the only way to cover your costs is to have an adequate stream of income being generated by your company. Calculate level-headed projections on the amount of revenue you anticipate on making in 3 months, 6 months, a year, or even 3-5 years down the road. Don’t forget to estimate the prices of your offerings, which are certainly needed for inclusion in a small business budget.

Learn more about crafting the best small business budget for your entrepreneurial endeavor by teaming up with the accounting and financial experts at 1-800Accountant. To learn more today, call 1-800-222-6868 or check out www.1800accountant.com.

Image credit: The image included in this blog post is used with permission via the Creative Commons license through Flickr.

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