A budget is an essential part of any sign making business plan, but many of us struggle to get our dollars and cents in a row. If you have trouble making, or sticking to a budget, try putting these 5 suggestions into practice:
- Your budget is your friend, view it as such. If you see a budget as a burden, sticking to it is going to be difficult. Try to view your budget as a useful tool for your small business. It is your company’s written financial plan. Use it to set financial goals and track your progress.
- To get started with your budget first come up with a sales revenue target. Make the best estimate that you can.
- Figure out your estimated gross margin. From your past experiences at the business estimate the cost of your good sold, (which may be 60 or 70 percent of your sales) and then subtract it from your sales revenue. This will give you your estimated gross margin.
- Make a list of your fixed expenses, such as taxes, rent, and other costs that remain the same no matter how much you sell. Total these expenses. Next, estimate your variable expenses. These are the expenses that change depending on how much you sell. Add the total of your variable expenses to the total of your fixed expenses. Take that number and subtract it from your gross margin. This will give you your estimated net income before federal taxes.
- Rather than making a year long budget, break it into quarters. Having the opportunity to pause and monitor your progress every three months will help you to make sure you are staying on budget. It will also alert you to any problems and allow you a chance to make any changes you need to your budget.
Sticking to a budget isn’t easy, but it is the best way to ensure a stable financial plan in your business. Of course, you will need to make adjustments to your budget from time and again, but at least having one will keep you a little more aware of your financial responsibility.
What tips help you to create/stick to your budget? Share them in the comments section below.