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Create a spreadsheet to help you track your financial transactions. Make a list of all of the categories for your expenses. These categories will include items such as rent or mortgage payments for office space, payroll, utility bills, office supplies, cost of raw materials, taxes and benefits, and other business expenses such as travel. Write down an estimate of how much you will spend in each category for each month.
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Next, list all of your income to your spreadsheet. When you subtract the total expenses from your total income, you get the amount of profit that you have made. You will be able to tell if you are operating in the black or if you are operating in the red.
Every month, take time to carefully review spreadsheet. You need to know exactly how much money is going out, how much is coming in, and how much profit you are making. This information will be your basis for forecasting future income for the year. If you see that you are spending more money in one category than you have budgeted, adjust the category accordingly.
If you are going over budget in all of your categories, you should take a look at your expenditures. Using web based services sometimes can save you a significant amount of expenses. You can invest in Internet Faxing instead of wasting ink and paper to send out faxes. Are there any ways that you could reduce your costs? Could you train employees to turn off lights and computers before going home for the evening? Could you make less long distance calls? Could you find a cheaper source for your raw materials?
A budget isn’t meant to be a stick to beat you with. It is meant to be a guideline that will help you make wise financial decisions
