Business Budgeting: The Most Essential Components

Every business, no matter the size, needs to budget. This plan not only accounts for regular expenses but covers and funds current and future goals, all with the purpose of returning a profit. In the process, any income must align with your company’s plan and provide enough for emergencies and other challenges you haven’t anticipated.
Often, however, budgeting is easier said than done. So, whether you’re drawing up your budget for the first time or refining an existing plan, make sure yours includes these aspects:
Your Expenses
Every business has expenses grouped by fixed, variable, and periodic instances. Within these, know how much you spend per month on fixed items – business insurance, rent or mortgage, and payroll, for instance. Then, make a note of periodic, or occasional, expenses that you won’t pay now but will months down the line. As a third component, factor in variable expenses – items that could change or could crop up without prior notification.
Once you’ve come up with the amounts for all, you’ll know whether you have enough revenue, what you have revenue for, and if and when you can expand your business.
 Get Everyone Involved
Dysfunction often stems from a company’s “visionary” team – the executives and other employees driving projects and efforts – being unaware of the financial aspects. What results is, a business with a grand vision finds itself going far over budget.
Instead, it’s essential your “vision” team gets involved with the budging process. Aside from being aware of your expenses, this collaboration streamlines the process of implementing your strategy, effectively allocating resources, and getting closer to meeting goals.
Goals and Adjustments
Every business needs to draw up short- and long-term goals and factor them into the budget.
So, how do you know your team is on track? Businesses, these days, set key performance indicators, or KPIs, and, through quarterly reviews, determine if the company is meeting these benchmarks. If not, adjusting your expenses may be necessary.
Every business must include insurance, such as health care plans, Workers’ Compensation, and unemployment, into its budget. To take out a plan or find a more affordable option for your company, give us a call today at 203.439.2815.