Deciding and planning to start a business are very different from actually initializing it and making it into a reality. The fact of the matter is that you need to do a lot, and one essential part of the things that need to be done is the budgeting of the company that you are starting.
Budgeting is important for several reasons. First of all, without a proper budget plan, you won’t be able to know how much you have spent on the business, where the money is coming from and of course, where it is going. If you have a partner or if your business is added with investors, then the budget report becomes all the more crucial as you will need to make them aware of the money matters. Starting to write a budget plan from scratch might be hard at first, but then you also need to remember that doing it right the first time will ensure that you can monitor and asses your company’s performance with ease.
Although budgeting plans are lengthy and very detailed, there are a few basic points that need to be mentioned in the plan, these are as below.
Start with the material
Gather the costs of the raw material which you have. These will also include any supplies that you may be using along with the information of their quantities and rates. If you are constructing something, then you also need to include the man hours that have been put into its development. Remember, be thorough.
Office rents or mortgages
A lot of money goes into the payment of rents and mortgages and so they need to be calculated as well. Also, if you are using any other kind of facilities, include those in the budget as well. Another major contributor to this section is rented equipment, if you have any. Make sure you note the rent, and the hours that the machine has been used for.
Salaries and wages
A major chunk of your business goes into the salaries and wages of your employees, so it is critical that you note these down as well. If taxes apply, do the math and work according to that. If you are offering any bonuses or sales commissions, these need to be mentioned in the report as well. Also, include any benefits such as health and security if they are being offered.
Estimate the bills
Your basic budgeting also needs to include the utility bills of things such as gas, electricity and water. If you aren’t sure about them, ask any business such as yours and they might be able to help you out in this regard.
If you have a business that requires some kind of travelling then these should go in travel and transportation expenses. However, travelling expenses aren’t easy; there is a lot that you need to research about. For example, if you are sending an employee abroad for a business transaction, you need to know these things.
- How long will he be going for?
- Which hotel will he be staying at?
- How much food expenses will he be provided with?
- If there is car travelling involved then what is the cost of the fuel per mile?
Advertising and marketing
Your business is going to need a good marketing strategy if it has any chance of survival in the competitive market of today. Sit down with the people who will be handling your marketing and ask them what kind of promotional and advertising costs they will need to work with.