How to make a budget plan: When you’re starting and operating a business, having a budget plan is one of the most important tasks you have to do. Statistically the lack of money is one the main causes of business failure. Sometimes it could’ve easily been avoided if there was a good budget plan in place.
What is a budget? A budget should be part of your overall business plan; it is a plan for revenues, profits and expenses .In the world of startups you have plenty of companies that you don’t see on the media. Who are super successful without raising millions upon millions of dollars. These founders were very smart because they never have to give away a large share of their company to investors. It also helps them to think more critically of how they spend every single dime.
Setting a budget plan can prevent you from overspending and help you to become frugal and spend money on things that matters. The issue faced by many business people is that they don’t know how to make a budget plan. A budget gives you the opportunity to feel a sense of control within your organization. It can also help you to spot areas within your organization where money is being spent recklessly.
This will help you to develop a plan to solve that issue. To set a budget plan for your organization, you can use some of the steps below:
How to Make a Budget Plan
Step 1
You must first determine what kind of budget plan you want to create. You can create a weekly, monthly, quarterly or even yearly budget it’s all up to your preferences and business goals. Monthly budgets tend to have a lot of benefits because it can give you the freedom to see how your predictions weigh up with your actual income without having to wait over a long period of time.
Step 2
You then have to incorporate fixed expenses in your budget plan. Fixed expenses are basically a section on your budget plan where you should put cost that’s never going to change over a long period of time. Loan payments, property taxes and utilities are all good example.
Step 3
This step is the opposite of step 2; basically what you are going to do is include variable expenses. Variable expenses have different costs each month. Examples of these would be phone bills, production supplies and labor.
Step 4
Include an income section; this is where you are going to forecasts your revenue, set goals and make predictions. You are going to put your forecasted earnings figure in the income part of the budget plan. You are then going to leave the income part blank until the end of the budget plan period to see how well things have went.
Step 5
Lastly you got to carefully analyze your budget at the end of the budget period. This will help you know how well your business has performed in relation to the plan. You then have to subtract your real expenses and income from the budget numbers. It will help you to see how your business has performed.
A budget plan is really important in any organization that is serious about doing business for the long term. It helps to improve your money management skills. So that overtime you can become more responsible when it comes on to what you spend your money on and how you did it.