How to Make a Budget for Your Small Business

Expenses

Look through your records and note all the outlays your business makes per month to keep operating. These may include:

• Overhead — fixed, recurring costs such as rent and utilities.
• Payroll — permanent staff and independent services or consultants. Don’t forget payroll taxes and employee benefits.
• Materials — retail stock or manufacturing raw materials.
• Depreciation — on business equipment such as computers or vehicles.
• Debt repayment — on business loans or other investments.
• Insurance — liability, property, worker’s compensation, commercial auto.
• Taxes — income tax, sales tax, business licenses, import duties.
• Marketing — advertising, promotions, business forms printing.
• Incidentals — office supplies, business travel, client entertainment.

Income

Now review your monthly income. Ideally, it is greater than your expenses. Although it is sometimes a good strategy to take a loss for a short period in order to meet a particular goal, no business can sustain long-term losses. You may receive one or both of these types of income:

• Recurring income — consistent revenue from retainers and contract work.
• Expected income — variable revenues depending on the season and other factors inherent in your market or industry.

Next Steps

Now you can start creating versions of your budget for different situations — both good and bad — that may happen to your business, and planning how you’d handle them. For example:

• Your competitor undercuts your prices
• You lose your biggest client
• You move to a more (or less) expensive location
• You boost the sales volume by 5%
• You hire an additional employee
• You obtain a loan to expand your business

Make It Even Easier

Xendoo makes it easy for small businesses to use our professional services by offering flat monthly fees. No variable expense like you get from accountants who charge by the hour; just one simple, affordable number. Try plugging that number into your budget, along with how much more you can produce in the time you used to spend on accounting chores. We think you’ll find that it’s a very smart option indeed.