One of the most popular New Year’s resolutions is to stick to a diet and lose weight. It’s also the one that most of us don’t achieve. I’m no exception. I can’t even count the number of times I’ve tried a new diet and exercise regime in order to lose weight. The problem is I find many diets complicated, I get discouraged very easily and quite frankly, I love food and hate to exercise.
Creating and sticking to a budget can feel a lot like finding and sticking to a diet. Many small business owners love the work they do but sitting down to look at their budget is about as appealing as doing 100 sit-ups and eating a bowl of spinach.
Here are some tips to make things a little simpler and hopefully help you achieve your resolution to achieve financial health for your small business.
- Understand the reason for doing a budget.
The goal of creating a budget is to get a clear picture of how much you expect to earn and how much you expect to spend in the upcoming year and then to decide how you will invest the balance so that your business continues to grow.
- Estimate Sales.
If you’ve been in business, this may be a little easier for you. If you’re just starting out, forecasting sales can be difficult. Information from sources such as your competition, neighbouring businesses, suppliers, downtown BIAs, associations and directories may be helpful. I always recommend that clients do a worst case scenario — be as realistic as possible.
- Estimate every conceivable cost.
Be sure you include advertising, legal, transportation, insurances, rent, phone, utilities, payroll and loan payments. Make sure you have savings to cover at least six months of business expenses.
- Don’t forget to pay yourself. Remember you have to cover your personal expenses as well as your business expenses.
Once you’ve got all of this documented you’ll be able to see exactly what you have to earn in order to cover your personal and business expenses. As with your business plan, your budget can change over time. Review your budget regularly and make adjustments as necessary. Microsoft offers a template to help you track your expenses.
Check out these other resources:
- RBC Small Business Cash Flow Tool
- Scotia Cash Flow for Business Tool
- Drafting your budget from Entrepreneur.com
- Cash flow template and other resources from CYBF
Please contact our Centre if you need assistance creating or reviewing your budget. We may even refer you to one of the several accountants and bookkeepers who volunteer through our Access to Professionals program to provide a free consultation on budgeting. When you think about it, doing a budget is actually easier than sticking to a diet. So grab a bag of chips (or carrot sticks!), roll up your sleeves and start crunching.
Have you been successful in your efforts to achieve financial health? Have tips to share about how you succeeded? Tell us about it! At the end of the month we’ll submit all entries into a draw for a chance to win a voucher for one of our upcoming seminars (value $25).
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