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Budgeting Essentials Blog

Helping you master the practical essentials of Budgeting, Cash Flow, Accounting and Debt Relief.
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Keys to a good startup budget

Your startup business is getting ready to go and it is time to create your first budget. What do you need to include?   Learn more in this week’s blog.

You are ready to begin your first budget. You have gathered all of your operating data and you ready. But is a normal operating budget enough for your startup company?

You have to have a normal operating budget for your new business. You need to know what your revenue and expenses are projected to be. But in addition to that, there are also other things that you have to take into consideration when starting a business. 

Startup companies have needs that ongoing companies don’t.  You will need to buy supplies and equipment for your new business.  You need to plan how you are going to pay for them.  You need everything necessary to operate your new business. That includes any equipment you need to run your business and operating supplies to keep things going.

Then you have the regular business items you need to consider.  Are you invoicing your customers?  You need to have a way to bill them.  You may decide to bill electronically.  Then you need a computer, a billing program and an internet connection.  You need to keep track of your finances.  That is another computer program.  (I don’t recommend you even think about doing your books on paper, you can get an accounting program for less than $200).

Another thing to consider is advertising.  How are you going to let people know that you are open for business?  You may be able to build a word of mouth business, but when you do that, if you don’t already have a large following it will take time for that to happen.  That means you are going to have to do some sort of advertising.  Even if you are using social media to advertise, it will cost you money to place your ads.  You may want to hand out stuff with your logo and phone number (or web address) on it.  That is another cash outlay.

What about equipment for your business?  Even if you have an online business you are at least going to need a computer and internet access.  If you do something in the real world, like lawn maintenance, you need your mower, a trailer, a vehicle to pull the trailer and a bunch of hand tools.  Each business has unique equipment needs.

If you are opening a store or an office, you have rent to consider.  You may also need to pay a security deposit on the lease.  At a minimum, you will have to personally guarantee payment of the rent.

Once you consider all those start up costs, the next thing you have to do is figure out the timing of your charges and payments.  If you allow your customers to pay anything later than right away, you are going to have a delay in your money coming in.  When you couple that with when you have to pay for your regular business expenses, materials, supplies, rent, internet, etc., you may have a need for additional cash to keep you current on your bills.  New businesses often have to pay right away for their materials and supplies until they get established with their vendors. 

In addition to your normal operating budget, you also need a way to account for all your start up costs and be able to plan how much money you need and when you need it.  To do that, you prepare a special startup budget that lays out all the items that I pointed out which apply to your business.  While it is like a regular budget, a startup budget helps you plan the timing of both your purchases and your cash needs.

The final piece that brings everything together is a cash flow budget.  That brings your normal operating budget and your startup budget together.  Then you will be able to see your combined cash needs for your business.

These keys to preparing a good startup budget will help you be prepared to become a successful small business owner.

To learn more about cash flow and budgeting, sign up for my upcoming free online Cash Flow Workshop HERE.  I will email you when the next workshop is scheduled to begin as well as sending you a link to each new weekly post in the Budgeting Essentials Blog!

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To learn more about cash flow and budgeting, sign up for my upcoming free online Cash Flow Workshop HERE.  I will email you when the next workshop is scheduled to begin as well as sending you a link to each new weekly post in the Budgeting Essentials Blog! I will be teaching my Cash Flow Workshop soon, so don’t miss it!

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God Bless your week!

 

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© 2019 Dan Heiland 2019 Kat Heil, LLC

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