It’s important to create and maintain a budget for your business. Think of it as a financial roadmap for your business that allows you to track your business expenses and how much revenue you need to keep the business in operation.

Budgets can also help you to strategically plan for equipment purchases or leasing new office space before you commit the funds. Also, budgets can help you determine if you can afford loan payments including the interest under your current revenue level and forecasted levels.

Here are some things to keep in mind when preparing your business budget:

  1.  Projecting or forecasting your sales and any seasonality in revenue should be a part of your budgeting process.
  2.  In addition to operating expenses, you want to plan for any major purchases.
  3. Set aside funds for your quarterly federal taxes and state/local taxes.
  4. Monitor your budget on a periodic basis to be sure you stay on track and also update as the need arises.
  5. Build an emergency fund for unexpected costs for your business.
  6. Consider protecting your small business with insurance in the event of illness or disability and also liability coverage
  7. Try to reduce costs and expenses where you can including renegotiating terms with suppliers.

Remember your budget should be realistic, flexible, and a true reflection of what’s happening in your business. If you find there is not enough revenue coming in to cover your expenses make the necessary adjustments but you won’t know until you go through this process.

There are some software applications, and programs that can help automate the budgeting process but some find it easier to use a spreadsheet.

If you need some guidance on your business budget check out this free resource: Business Budget & Sales Forecast Template: