If you’re in the process of starting a new business or if you’ve already launched a new business, budgeting is one of the most important steps for any budding entrepreneur. There’s a few things that you should consider before you put your ‘entrepreneur hat’ on in order to ensure that your company has a proper, structured, realistic budget prepared that you can stick to.Check out these top tips in order to properly prepare to start running your business to a profit.
This is an important step, you need to work out how much it’s going to cost you to run and grow your business. Researching the costs involved in the business is an important first step. Really you should be as realistic as possible about your business’s costs in order to avoid any hidden charges/surprise once you start to work your business magic.
Project, Project, Project!
How much revenue can your business generate? The next tip that we advise is to calculate how much revenue your business is capable of making. As well as this, you should work out how much of your business’s revenue you will be able to keep as profit. You can work out your gross profit margin by deducting the costs of running your business from the amount of revenue it generates every month.
Another component to consider is cash flow. How steady will your business’s cash flow be? A 12-month cash flow projection is a good way of working out how steadily the cash will flow into your business from its customers, clients and any other partners you may have in the business.
There are plenty of different things which, as a business you should be able to adjust for. For example, are you prepared for any unreliable payers that you may have. If you prepare for missed payments or other financial setbacks ahead of time, you can deal with them better as and when they actually happen.
Seasonality is something else to consider. If your product or service depends on the time of the year, you should be aware how this will affect your business and the level of demand through the year as this will likely affect things like cash flow. It’s also worth being prepared for any economic or industry trends. This is handy to look at as it will likely give you an idea as to the future of your business, is it going to be a viable thing to continue or could you have a potentially rocky future ahead of you?
One final thing to consider is the cost of marketing your business. This is something that you’re either going to have to undertake yourself or pay a proper marketing agency to do for you depending on the type of marketing you would like to have done. You may need specific marketing services like financial marketing or you may want to look into doing some TV advertisement or you may just want some simple, straight forward SEO services.
Now, if your background is in any of these, you’re pretty much sorted as you can invest your own time into this but failing that, you’ll have to look to hire someone and this, obviously will cost you money and this is also something that you should be able to adjust for if you haven’t already planned the cost into your projections.