One of the essential tools for a businessman is a business budget. It is a part of your business plan, which helps to keep track of your monthly expenses and determine the amount of money you require from your investors. A budget helps you in planning the initial stages, running the business efficiently, and eventually leads to business growth. Preparing a budget keeps your expenses within limits, and you can figure out how much revenue you must generate so that your cost gets covered. You will also get to know how to avoid overspending and the amount you can reinvest. You can prepare it on a monthly or weekly basis.
The need for a business budget template
Using a template allows you to easily organize information as it has sections for estimated and actual expenses and revenue. With a business budget template in place, you can write down your monthly business expenses. These expenses include the cost of raw materials, manufacturing expenses, marketing expenses, travel expenses, office lease payments, website hosting expenses, etc. Preparing a business budget template in excel will save your time and effort. You can enter your income and expenses in the template without having to adjust the template every time. Documenting the costs would enable you to set aside the funds needed. However, you need to know about the things that your business budget template must show.
1. Operating expenses
The list of operating expenses is usually lengthy; however, it depends mostly on the type of industry. Examples of operating expenses are sales expenses, expenses for shipping and storage, rent or mortgage, marketing, and advertising, utilities, maintenance and repairs, debts, discounts, depreciation, interest, office supplies, telephone and internet, support of company website and others.
2. Operating income
Since this is the primary source of income, there should be a separate section for this. One can split this section further to show the streams of income separately. For instance, revenue from first sales and income from customized sales separately.
3. Non-operating income
Though this is not the primary source of income, this also adds up to the revenue. For example, this may include interest income from bank deposits and pay in the form of donations and grants received.
- Personnel expenses
Personnel expenses include salaries and wages, other benefits, and commissions in the broader sense.
The wages and payments can get split into few subcategories for ease of understanding. A business budget template should demonstrate your payroll expenses.
5. One-time cost
There should be a separate section as one-time expenses, which will show the initial cost of setting up the business. These costs include things like pieces of equipment, building up inventory, furniture and fixtures, and expenses of initial marketing and advertisement.
6. Emergency fund
The business budget template should show a separate section for emergency funds. The amount will depend on the type of business and the expenses you may have to bear. For instance, fire breaking out in your facility may cause damage. Though it might get covered by insurance, you need to pay for any deductibles and things not having insurance coverage. It comes under the category of retained earnings in the balance sheet, which is set aside after paying expenses and liabilities.
Getting a business budget template
A variety of business budget templates are available online for organizations ranging from startups to an established one. You can choose a template that suits your business, or you can customize the template to meet your unique business requirements. Using business budget templates helps to achieve your business goals in the long run. Moreover, if you want to organize your business funds without adding “budgeting” as a line item, then a free budgeting template can be a viable option.