Lynne Franks talks about creating budgets for your new business.
No matter what kind of business you're starting - even a non-profit one - if it's not funded property, it won't be around very long. All economic aspects of your enterprise must be well thought out and organised, with as much planning into the future as possible.
Here are the basics:
You need to calculate the amount of money you require to start up your business and where that money might come from: your own savings, personal loans from friends or family, inventors, the bank, or - as many small entrepreneurs have done - your credit cards.
You've got to estimate what your costs are going to be every month and when and how you expect to bring money in to cover them.
You must consider how you're going to finance your overheads and personal life while you're in the process of getting your business to a profitable stage.
Personal Expenditure
Let's start with your personal living costs. Calculate how much you will need to keep yourself for the first six months of your start-up. Cover your basic costs - rent and utilities (or the percentage of your home overheads that you're not using for work), food, entertainment, medical or dental costs, transportation, holidays, clothes and any other areas of personal expenditure.
Write the approximate amounts you spend on each category per month. Then total it up and multiply by six, adding 10 per cent for emergencies. The total amount is what you must either have saved, have credit lines to or must earn from your business immediately, to keep yourself afloat for six months.
You may decide to budget a salary for yourself that will cover your personal expenses as part of your start-up costs. If the business can't support you totally at the beginning, I do recommend that you pay yourself a salary, however small.
**Also, don't forget to budget enough money to cover your tax payments.**
'Don't give up your day job'
Some people manage to start their new enterprise while working full- or part-time at their current job. In any event, unless you've got some substantial savings, or don't already have a job to give up, don't give up your 'day job' before you really have to. This is usually when you are sure of the viability of your enterprise and how to create it.
Preparing business budgets
There are various budgets that need to be worked through before you can amalgamate them in your business plan. The important thing is to create simple budgets for every aspect of your business.
Write out and calculate simple budgets for the following:
basic office essentials - computer, printer, fax and filing cabinet
tools of your trade
locations costs - rent, council fees, telephone, utilities and furniture
