Thanks to Vangogh we now have a nice new Business Plan sub-forum. So I thought I would start it off by starting a thread on one of the sections of the business plan.
OK - unless you are wealthy to the point of being able to throw away money, you need your business to bring in cash. Simply put, that means the money you spend on the business needs to be less than the cash it brings in. For the most simplest of budgets you have a column for expensive and a column for income. It may look something like this (very simple version):
Revenue = $1600 - $380 = $1220
However, most business will have a great deal more items. Federal, State and Local income taxes, employee taxes, Owner withdraws, advertising, office suppliers, heat/water/trash/gas, travel expenses, computer and computer services...... the list continues. The goal is to give each dollar a name at the beginning of the month. The first month, you will likely be way off. Adjust the plan for the next month. Each month you will get closer. If your income is highly variable, then you may need to prioritize. So you start with something like - the first # dollars go towards _______ once that is paid for then next dollars go toward ______. Continue this until everything is paid.
The same goes for revenue. You may find that your sale forecasts were either too optimistic or pessimistic. Adjust as needed.
The end goal is to generally know that you need to make ## number of sales, or do ## jobs to make a profit for the month. In some areas this estimate will be rougher than others. Instead you end up with something more like you need ## small jobs plus ## big jobs. That's OK too.
Part of the process for creating the budget is seeing how different expenses affect your sales requirements. Is it possible to sell 200 more items a month so that you can afford the larger office, how many additional sale are needed to have a new versus used computer.... Putting your budget down on paper forces you to see those items.
OK - unless you are wealthy to the point of being able to throw away money, you need your business to bring in cash. Simply put, that means the money you spend on the business needs to be less than the cash it brings in. For the most simplest of budgets you have a column for expensive and a column for income. It may look something like this (very simple version):
| Income Source | Amount | Expense | Amount | |
| Sale 200 of widget 1 | 400 | Sheet Metal | 10 | |
| Sale 499 of widget 2 | 1200 | labor | 20 | |
| Utilities | 100 | |||
| Rent | 250 | |||
| Total | 1600 | Total | 380 |
Revenue = $1600 - $380 = $1220
However, most business will have a great deal more items. Federal, State and Local income taxes, employee taxes, Owner withdraws, advertising, office suppliers, heat/water/trash/gas, travel expenses, computer and computer services...... the list continues. The goal is to give each dollar a name at the beginning of the month. The first month, you will likely be way off. Adjust the plan for the next month. Each month you will get closer. If your income is highly variable, then you may need to prioritize. So you start with something like - the first # dollars go towards _______ once that is paid for then next dollars go toward ______. Continue this until everything is paid.
The same goes for revenue. You may find that your sale forecasts were either too optimistic or pessimistic. Adjust as needed.
The end goal is to generally know that you need to make ## number of sales, or do ## jobs to make a profit for the month. In some areas this estimate will be rougher than others. Instead you end up with something more like you need ## small jobs plus ## big jobs. That's OK too.
Part of the process for creating the budget is seeing how different expenses affect your sales requirements. Is it possible to sell 200 more items a month so that you can afford the larger office, how many additional sale are needed to have a new versus used computer.... Putting your budget down on paper forces you to see those items.
via Small-Business-Forum.net http://www.small-business-forum.net/business-plans-ideas/9360-business-plan-budget-section.html
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