How to gather info, anticipate revenue, and estimate expenditures when writing your business budget

Whether you are writing up a business plan for a start-up business or you have been in business for years, you need a business budget.A budget is the one thing that helps you set goals for your business and helps you monitor the business as it operates from day to day; it is the key to your business success.Here are some tips for gathering information, anticipating revenue, and estimating expenses when you are creating your budget.

Gathering information-if you have never done this before, you will need some information about business budgets before you attempt to make one.Fortunately, there are books on this topic, there is plenty of internet advice, and also business software is available that can teach you all there is to know about building a good budget.In a nut shell, business budgeting consists of working out your projected sales and your direct and fixed costs for running the business.Once the budget is created, you will need to constantly monitor and manage your budget.Check on your budget often and see where you have miscalculated.If there are revenue or expense items that consistently depart from your projection find out why.If the problems can't be fixed, you will need to adjust the items on your budget.

Anticipating revenue-anticipating your is the biggest guessing game of budgeting.There are two ways that you can try to determine what your revenue will be.If you are starting the business, you will only be able to guess what you might make by considering the revenue generated by competitors or by similar businesses.There are software programs that allow you to anticipate you start up revenue but these will only give you a ballpark figure because you have to input your best guess about your sales and accounts.

If you are renewing your budget for a new fiscal year, the task of anticipating revenue is a little easier.You will be able to use the previous year's earnings as a guide.Of course, you will need to make adjustments for the new year.Consider the sales plans and any changes in the economy.Other things to consider when projecting revenue are changes in the competition.Keeping current on everything that is happening in your industry is a good step towards making accurate forecasts about your revenue.Try to be realistic when anticipating revenue.If is easier to work with more money than you budgeted for than less money.

Estimating expenditures-this is probably the easiest step in budgeting.The fixed costs or overhead costs are usually set in stone (or something like stone).These costs include rent, service charges, wages, and utilities.They are called fixed costs because they are fixed or at least mostly fixed.Gas prices might rise and fall and your telephone bill will fluctuate as well but usually not beyond predictable parameters.Direct costs are the cost of making your product or conducting your business.These costs will fluctuate with your revenue.If you are selling more products, you have to produce more of the product, right?Direct cost estimation is usually done with computer software but you will be able to get a good handle on your direct costs by considering the direct costs from the previous year and making the same adjustments as you made to your anticipated revenue.

Once you have made your budget, you need to monitor it and make adjustments when necessary.Budgets are only guidelines that will help you realize your bottom line goal.If the budget is unrealistic or overly optimistic, it will not help you.A realistic budget will be flexible and will allow for unexpected variations.