How to Set Up Budget Plan for a Small Business? - Part 1
Updated: Jul 15
Creating a business budget plan may seem like a hassle, but if you have one you can share your resources more effectively and afford to invest in more essential things in order to grow. Budget management is not always simple but with budget approval and tracking software it can be effortless. But even with that, you need to take time and have a closer look at your income and expenses, especially if you continuously put more work and hours in your company but the profit does not change or even decrease. You might realize that you do not manage your spendings and subscriptions well and you pay for unnecessary tools or services, or you might need to change for a more affordable solution for a specific matter, that you did not notice before.
So, how can you plan your business budget?
A well-planned budget should break down your income and anticipated and predicted expenses by month or by quarter. If you have more departments in your company it is also better if you do separate plans for each one of them, or you can budget the company money by teams as well. These smaller plans should also be broken down by month or by quarter, and then you need to combine all these plans together to get a whole overview and form your main plan called the master budget.
Define your income sources
The first step is also to be aware of all your incomes. These can be your earning after your sales or money from investors, but any other resource should be added that you use to run your business, such as interests after your investments, any kind of loan you received, or some savings that you devote to your company. A lot of business owners or CFOs forget to note here the expected reimbursements, but you can easily claim your taxes and costs back with the help of an expense reimbursement software, such as Haslle.
Deduct fixed, periodic expenses
After defining your income resources you need to deduct the fixed charges that have the same price periodically, mostly monthly, or yearly. The most common fixed costs are utilities, rent price, wages, insurances, and subscriptions to different services and tools.
This is the easiest part, especially if you use a spend management software, as you can automate your payments and manage your subscriptions in a simple way, even on your phone on-the-go. Furthermore, it is easier to spot an avoidable fee if you can check your expenses anytime.
Variable expenses are similar to the fixed ones, as they are also periodic, although we cannot know in advance the exact amount of the future invoices. It can be that your office charges are not the same every month, or you pay for services monthly which are hourly based and not fixed fees, such as audit or financial advice. But you can estimate the numbers based on last year, ask for an estimated price from the supplier, or you can research the general prices of different services. Normally there should not be such big differences between these periodic charges, or if it is the case, then it is better to count it in the occasional expenses as you can not really predict them in advance and could create significant contrast with your plan and the outcome of your results at the end of the year.
This step is more challenging, as no one can predict the future. Sometimes you could face unexpected surprises, but if you prepare a business budget plan you can be well prepared for these. It can happen that something goes wrong in the office, a computer crashes or you simply need to upgrade a tool to grow your business.
You can also count here some planned occasions, such as business travels, lunches, or team building events of which you can even know the prices in advance. You might think now, that it is too much to think of and collect information and prices but with an invoice processing software, you can issue company expenses card which can be virtual or prepaid and set the budget on them by team and departments, so you can already allocate money for the unknown expenses.
Would you be interested in smart company cards?
Click below and check how to use them with Haslle:
Now you are more or less aware of all your incomes and expenses, so it is time to summarise them. You can create a detailed list with the costs of the above-mentioned categories and hope that your outcome will be positive, but to make your life easier you can plan all your budgets with software that makes the finance management hassle-free.
You can save time and money if you leave behind the old-fashioned, paper or excel based plannings and reports as instead of numerous steps you need to go through, a software solves all this for you, your only task will be to perform a couple of clicks or touches on your phone.
With Haslle all these procedures and planning could be effortless, with simple clicks you can set up team budgets, approve expense reports, automate invoice processing, and get a full picture of your finances.
In part 2 next week we will explain why you should budget your money. Click below so you do not miss it: