For any entrepreneur, starting a business is just like climbing a mountain! The way towards success looks as hard as it can be from the starting point. Any business stands on the basis of its uniqueness, and the determination that drives it towards success. There are some simple rules that works well when the business is creating its existence in the industry. And the most important one that can make or break your business is how you work on the term of a ‘budget’.
When it comes to budget, a CPA is always there! He will guide you through every nook and cranny of budgeting. But still, here are some things that can be done on the part of an entrepreneur and nobody else. The aim of this blog is to acquaint you with some very important budgeting points. So, just read till the bottom to unlock the secret of budgeting.
No Personal Expenses!
The foremost important thing to remember when it comes to budget is ‘no personal investment’. Business is a business. It does not matter if you are about to start a software company or a hardcore hardware shop, whatever it may be, it will need money. That is why it is very important to list out your business expenses beforehand and totally separate it from your personal expenses. After a list is ready, differentiate the fixed costs and the variable costs. Every single business has some fixed costs and similar costs, like, rent, internet, electricity bills, etc. while variable costs will depend on the type of the business.
Take out some amount for taxes
It is but obvious for an entrepreneur, who’s starting his business afresh without having prior experience to calculate every single amount needed to add in his expenses. One such amount will be about taxes. At the start it is quite natural that an entrepreneur is unknown of the tax cost he will have to pay for his business. But if you are about to start a business do not forget to list this tax in your ‘costs’ list. The tax is very important as it will fall in the fixed costs, depending on the state rules. So, it is necessary to have information about the tax you have to pay for your business.
Calculating the profit amount
Though, it is next to impossible to calculate the exact amount of your profit. But it is not difficult at least to assume an amount that will make it easy for you to plan for the future investments. You can assume some of the fixed and some of the variable costs. Future investment in a particular area of business can be determined beforehand. In a similar way, an increase in the rent, in taxes, in employee salary can be presumed, which will help you decide the future costs and you can at least draw a line of the total budget and total investment.
Keep a track
You have done it all! You have calculated your budget for a short time, also calculated the expenses you will have to keep up in the long run, and that’s it. No, the process does not stop here. Remember that you have just forecasted it and calculated the sum. But a very important step to be followed is yet to come. You will have to keep up with the list! Calculating the budget you have set and whether it is correct or not will be the real task you will have to do. Also, making necessary changes in the list is also of utmost importance. Adding up the extra, out of the list expenses and deleting the unwanted will be a real task you will have to do always.
This will sound a very time- consuming process, as it actually is! But after all budgeting is the key for a business success.
Compiled by Mirror ReviewÂ
