Budgeting! Budgeting! Budgeting! – Everywhere!
Budget is the basic notion of a business. If you want to succeed you cannot miss out budgeting. Once you start making money, you should create a plan on how to spend it. And here we call that plan as Budgeting.
It is a crucial tool that helps you track your business expense, revenue on hand and how much needed for future resources. Budgeting lets you weed out the problems in your organization.
Know your money better!!! Knowing your money doesn’t mean looking at your money and keeping it safe. Budgeting helps you know your money better, Know where every single penny is going and coming from. It gives you enough amount of information, experience, and more power over your money.
Why do you need Budget?
As per United States Small Business Administration, a budget can be used to demonstrate the following details:
- Operational cost.
- Labor and material or resource cost.
- Start-up or new business cost.
- Revenue required to support your business.
- Estimated expense and profit.
Using this information you can make adjustments in your plan. If you end up not meeting your target , you can use budget to troubleshoot the issues.
Where to start?
Sketching a budget is easier if you have already made one. If you are new to budgeting and have never written one then this article is for you.
Go ahead! Read on…
Start by targeting your sales and revenue. For new startups and small businesses, create an estimate on how much profit you want to see in the coming year. If you are already in business then take up your recent financial statements as the basics to develop this year’s budget.
Also consider those factors that might affect your sales and growth.
Calculating Operational Cost
Yeah! The best place to start is your financial statements. In this statement include your operation expenses. Rent, salaries, research, travel, taxes etc., all of the costs should be recorded under this.
Gross Profit Margin
Figure this out!!!
Gross Margin = (Revenue – COGS) / Revenue.
It’s very simple, calculate the cost of your goods sold starting with inventory, goods bought or manufactured, shipping fee etc., and subtract everything from your overall revenue earned.
Budgeting is not perfect science! It may not give results like a science experiment does. So, you have to be ready to make changes when the sales target does not meet your actual budgeting figures. I will most likely want to go back to your budget and make changes but get expert help while re-adjusting your budget figures and take your own time to do so.
If you are a startup, these are the places or things that you have to get started. But PivotXL, a perfect budgeting software can help you skip all these things and save your time and energy.
You may ask for a demo? If so, Contact Us and have a chat with our expert team.