So you’ve come up with a great business startup idea and you are ready to launch. But before you can get started actually running your business, you have to invest in it and you have to get the funding you need to get your new organization off the ground.
If you’re wondering how you can establish a budget for your startup or how to build corporate credit fast, continue reading for a few tips and some helpful advice.
Create a Short-Term and Long-Term Plan
A great way to effectively create a budget for your startup is by considering short-range plans, such as those that you plan on accomplishing from one month to the next. Create this calendar of plans for a minimum of one year.
Also include a minimum of a three-year plan that includes long-term goals that you can accomplish from one quarter to the next. Update your long-term budget whenever you prepare your short-term plan.
The great thing about this strategy is the fact that you can establish goals and determine how much money you’ll need, as well as when you’ll need the funding, so you can budget accordingly.
Estimate Variable and Fixed Expenses
Another step you should take involves estimating your variable and fixed expenses. You should think about how much you’ll need to spend in various categories, such as advertising, security, raw materials, staff, equipment, rent, taxes, utilities, licenses, and insurance.
Factor in how often you need to make payments to these categories and then incorporate these expenses into your short-term and long-term plans so you can calculate an accurate budget based upon your startup’s needs.
Use Professional Bookkeeping Software
When it’s time to actually write down your budget and set it into place, you can do so either manually or by using the built-in budgeting functions found in the top professional bookkeeping programs, such as Microsoft Money or Quicken QuickBooks.
Using a software program has its perks because you can maintain multiple backups and also reduce the amount of paper that you need to use, thereby reducing waste and saving the money that you would’ve otherwise spent on the extra paper.
Most importantly, when it comes to budgeting for a startup, you need to be realistic. Answering the following questions can help you create the most accurate budget possible.
How much do you think you can sell in the first year, and how much do you expect your sales to grow? What happens if your sales don’t happen like you planned? How much money will you spend on producing your products or purchasing inventory? How much will your operating expenses be, especially at the beginning until you become more efficient?
With these tips and strategies in mind, you’ll be able to create a budget for your startup that you can use to get yourself through the first year and beyond. The key to any successful business, after all, is a budget that you adhere to so you can increase profits while limiting expenses.