Our country is extremely overflowing with new business ideas. You must have heard that planning is a crucial step before commencing anything; let it be buying, creating, manufacturing, procuring, launching, promoting or even selling a product or your services, you need to make a dynamic work plan, which ultimately means planning.
There are people who know how to open a small business, yet they lack budgeting skills. In this article, we are going to discuss the steps to maintain your start-up budget. But, before going on to the steps let us check the meaning of budget.
What is the budget?
You might hear the government has passed the union budget, finance budget, interim budget and many more. Likewise, we often hear the term, “budget”, but many of us do not actually know what a budget is! Making a budget involves a process in which:
- Future income; and
These two things are decided in order to balance the unwanted and uncertain expenditures.
Why it is important to prepare to budget?
It is very important for an entrepreneur to prepare a budget for his business. The reason is that no business enterprise can keep a proper and just track of:
- How much income it has earned; and
- How much expenses it has incurred;
Without having a proper budget; also a budget helps in:
- Setting targets;
- Communicating priorities;
- Controlling vague expenditures;
- Providing a profit margin;
- Strategies require funding;
- Forecasting, monitoring, controlling, and evaluating the finance and related goals, etc.
What are the types of budget?
Now, when you know the meaning of a budget and the benefits of preparing it, here we are listing the types of the budget that you would need to create for your start-up:
- Cash budget;
- Sales budget;
- Purchase budget;
- Direct material purchases budget;
- Labour budget;
- Overhead budget;
- Budgeted financial statements
Steps to help you maintain your start-up budget
There are many start-up business ideas, yet taking the start-up to another level with your excellent budgeting skills is the need of the hour. Following are the steps that will help you maintain your start-up budget:
Analyse your long term and short term goals
Give time some time and your brain some good deep thoughts to analyse, ascertain and find out your business goals. Your mission, vision, goals, and objectives of your business should be clear to you before heading towards your budget preparation.
Analyse your pocket
One must be very clear about his pocket before going for any outward approach or guidance. It may be possible that you already have sufficient funds or maybe not. So you must know what you are having.
Calculate your start-up costs
There are different kinds of costs associated with business especially when you are about to commence one. Following are the instances of cost:
- Capital expenditure;
- Fixed assets cost :
- Facilities cost
- Supplies and materials cost,
- Overhead cost; etc.
You need to assess all these costs to know your expenditures.
Assess your monthly expenditure
Now, when you have calculated these costs, you need to assess your weekly and monthly expenditure. Assessing your expenses would give you a true picture of:
- How much is your monthly expenditure; and
- How much it should be?
Assess your monthly revenue
Now, when you have calculated your costs and expenses, it is the time to know your income. This will give you a clear vision of:
- What you are earning and;
- What should you earn?
Prepare the cash flow statement
Now you have all the figures for the cost, expenses and the income of your business. It is time to prepare the cash flow statement. Preparing the cash flow statement will give you an accurate picture of:
- Cash inflow; and
- Cash outflow.
Create the budget
The last step is to create a budget for your business. Your budget is a tool that you use in your business. It is not just a document that you make and then forget. You will become confident over time by using a workable budget.
To conclude, these are the seven steps that you can follow in order to maintain your start-up budget easily. There are many start-up business ideas, yet taking the idea to the next level with proper skills is what you need to acquire.