BUDGETING.
No matter the size of any Business/Company, cash flow management is an important part of the operations of the business, especially when in the starting phase.
One aspect, which assists this, is ensuring you are sending out your invoices as soon as possible after the job/sale is complete and in line with your policies.
Another aspect of your Business is to ensuring you budget for the Business, A budget requires you to write down a list of your expenses, including when you expect to pay for each of the expenses, and the expected income, and which months you expect the income to be paid into your account.
The budget needs to be realistic – especially in the income column, it is better to be lower in the estimated budget than your actual budget, as anything over your budget will be a bonus.
Often a business will budget and plan at the following times,
- Calendar year- Jan 1 – Dec 31
- Financial year- July 1- June 30 – which also aligns with the Tax year.
| July | Aug | Sept | Oct | Nov | Dec | ||
| Income | 2,500 | 1,500 | 1,800 | 2,500 | 3,000 | 5,200 | |
| Total | |||||||
| Exp. | |||||||
| Phone | 100 | 100 | 100 | 100 | 100 | 100 | |
| Water | 250 | 250 | |||||
| Advertising | 180 | 180 | 180 | ||||
| Stationary | 100 | 120 | 100 | 100 | 150 | 200 | |
| Web site | 25 | 25 | 25 | 25 | 25 | 25 | |
| Internet | 90 | 90 | 90 | 90 | 90 | 90 | |
| Insurance | 3500 | 0 | 0 | 0 | 0 | 0 | |
| Car Exp | 400 | 400 | 400 | 700 | 400 | 400 | |
| Total Exp | 4395 | 985 | 895 | 925 | 1195 | 815 |
The above is an example of a 6-month budget and is a good budget, as in every month you are covering your costs expected in the first month of July, where you need to find 1895.00 from your savings to cover the costs of operating your business. – Or you may discuss with your insurance company about a payment plan to help with the budget.
At the end of the first ¼ or 6 monthly budget, you might decide to do another budget, one with a budget column and one with an actual column.
For this, it may look something like this, for the income side of the budget,
| budget | Actual. | |
| July | 2500 | 2200 |
| August | 1500 | 1800 |
| Sept | 1800 | 2400 |
| Total | 5800 | 6400.00 |
So in this table, your income was lower than budgeted for in July and higher in August and Sept, by doing it this way, it can also help you budget for next year.
In addition, you would do the same with your expenses.
In Summary, every Business owner whether small, medium, or large should complete a Budget each year, the Business should also monitor the Budget to see whether they are above or under Budget, and react accordingly. However, it is important that the Budget you set is realistic, no need to overinflate the figures to look; it causes too much Negativity in the Business when something goes wrong, or against the Budget.
