Six Steps to a Better Business Budget

When you spend without having a budget in place, you are basically driving blind and hoping for the best. Glenn Curtis writes for Investopedia with steps to put a business budget together. Begin by using libraries, the IRS website, and conversations with other business owners to get a grip on average costs within your industry. Build a spreadsheet that calculates what percentage of revenue will be needed to cover various costs—raw materials, rent, taxes, etc. Just remember to factor in that your estimations could be a little off. Do not set up a situation where being wrong means financial death.

If you need to cut costs, look into any advantageous payment terms offered by suppliers/creditors, and consider if waiting till the next billing cycle to make purchases will help. At any rate, review your budget more than annually in order to keep on top of changes. And lastly, business is business—if you can find new suppliers offering better prices than what you are currently paying, investigate making a switch.

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