Source: businesslink.gov.uk
Creating, monitoring and managing a budget is key to business success. It should help you allocate resources where they are needed, and should not be complicated. You simply need to work out what you are likely to earn and spend in the budget period. Most businesses start preparing a budget around two to three months before the start of a new financial year.
Overheads
- Cost of premises, including rent or mortgage, business rates and service charges
- Staff costs - eg pay, benefits, National Insurance
- Utilities - eg heating, lighting, telephone or internet connection
- Printing, postage and stationery
- Vehicle expenses
- Equipment costs
- Advertising and promotion
- Travel and subsistence expenses
- Legal and professional costs, including insurance
Your business plan should help in establishing projected sales, cost of sales, fixed costs and overheads, so it would be worthwhile preparing this first. Once you have figures for income and expenditure, you can work out how much money you're making. You can look at your costs and work out ways to reduce them. You should also be able to spot if you are likely to have cashflow problems - giving you time to do something about them.
You should stick to your budget as far as possible, but review and revise it as needed. As the budget year progresses, control might be better exercised by either a rolling budget or periodic reforecasting.
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