Ok, let’s look at the reality of what a Business Budget will entail:
First off, obviously you need to look at what your revenue will be for either a 6 month period of time, or a year. What is the reality of what your business makes? If you have not made anything as of yet, what is a conservative number that you can stick to as a target to receive, based on what other first timers are doing as well? It is super important to know where you’re going, but what you’re shooting for, so that you can work backwards in some of these other numbers.
When I started my Landscaping Company, we needed to know what was possible, financially, to be able to purchase machines & a vehicle. So, we looked into what the going rate was for projects. We then decided what we HAD TO DO, on a monthly basis, in sales to cover what would be purchased to actually do the jobs. Knowing your reality in the beginning will create your opportunity over all.
Now, if you are choosing to do eCommerce or a brick & mortar & are purchasing things at a wholesale amount to resell, you have to take into consideration your Cost Of Goods (COGs). If you are buying T-shirts to sublimate on, for instance, you need to take into consideration the cost of the Tshirt, sublimation ink, your time in making them, your packaging & shipping rates, just to name a few things. What will it actually cost to produce your complete product & get it to your customer.
The next thing to consider is if you are going to hire employees to help you, is what you will pay them, that is an overhead cost, but needs to be considered in your costs as well. Not necessarily in your COGs, but just as a labor item (i.e for P&Ls), you definitely will add this into your budget so you know what you can pay someone, as well.
Your operating expenses will generally be fixed costs, such as rent or utilities, phone, insurance. Things that you will need to pay for every month regardless. It will include your payroll & COGs, legal fees, accounting fees etc.
In a franchise, your operating costs will also take into account your loan payment, generally, best practice, you will always work with your CPA & know what your operating expenses are.
You will always need a marketing & education budget as well. If you are not marketing, you don’t have a business, unless you only market by word of mouth. When I talk about marketing, I talk about the costs associated for anything you print, for any time that you have “boots on the ground”, because that will take away from the time in your business. It will include anything SEO, PPC, anything digital or on your website. One HUGE thing to take into consideration on marketing is forecasting. What will you want to take advantage of that may come, that is new, or needed, or necessary in the marketing space throughout the year? You need to have a budget that can grow & take those things into consideration.
Then, you need to consider, learners are earners! If you just go on what you know, you won’t grow! You can’t, because you don’t know everything, & in our ever changing society, it’s important for owners to know what is coming & how to harness the opportunity when it comes! For instance, AI is being talked about & how much more efficient & productive it is. I know for those who are content creators, it’s invaluable. Is it something you need to know? If so take a class through Udemy or get Youtube information, I will tell you though, Youtube will of course give you information but it will be surface information. To get a knowledge of what can & will be done in an industry you need to immerse yourself. Even good coaches have coaches! So, I would add a budget for education.
I hope you were able to grab some nuggets from here to benefit you in this coming year!
Make it a great day!
