Think about when you started your business. Did you know your business budgeting basics?
If you’re like a lot of business owners, you were focused on making enough money to cover startup costs and basic monthly bills like internet and rent. As time moved on, you’ve likely been faced with decisions about networking groups, marketing services, what to charge customers or clients, and more.
At some point it may feel like your bank account is controlling you and not the other way around. It’s time for business budgeting basics to get you on track for financial success.
Business budgeting basics boils down to knowing your numbers. From income and expenses to pricing and contracts, a successful business owner understands their own business.
- Income is the amount of money your business takes in each week, month, quarter or year from the sale of products or services.
- Expenses is the money spent on anything related to your business — accounting services or marketing and networking costs, for example.
- Profit is the net amount or difference between income and expenses.
Ideally you should be reviewing income, expenses, and profit on a regular basis like monthly or quarterly. If you have too much money due to you, for example, you may need a different contract or agreement with customers and clients to address what happens when there is non-payment.
Knowing your numbers will also help you strategize and target your efforts, by answering questions like:
- How much does it cost to onboard a client?
- What are the costs per client for taxes, accounting software, Paypal or other billing site, marketing, networking, etc?
- How much money are you spending on networking groups? Are your networking efforts converting leads to sales?
- What’s your BIG income/profit goal? What do you need to do to reach that goal? How close are you to that goal?
- What do you need to charge for your services to get you to your income/profit goal?
Your business is a living breathing entity whose numbers and budgeting keep alive. It’s also about how your business efforts impact the bottom line. If you understand business budgeting basics, you can assess where you are today and plan for the future.
If you’re not sure where to start with a business budget, schedule a Power Planning Session today!