New business applications hit 5.4 million in 2021, shattering the previous record.
There are downsides to starting a business that people don’t talk about. They don’t know the financial stress that comes with irregular income. That level of uncertainty is enough to make you quit.
You don’t have to look for a new job. You do need to learn the basics of business budget and finance. If you get that part right, you’ll be able to build a thriving business.
You’re in luck because we’re about to give you a few simple tips to help you master your business budget. Keep reading to learn what they are.
1. Look at Revenue
Revenue is tricky because it’s hard to predict in your first year. Many entrepreneurs fly by the seat of their pants and stay that way.
That leads to burnout. Your job is to create a business model that lets you predict income.
If you’ve been in business for a few years, look at revenue over the past few years to average each month’s income. This is a guideline to help you plan ahead.
2. Manage Operations Expenses
Small business owners get bombarded with online courses, conferences, and software deals. They may seem great at the time, but they do little to move the needle.
Invest in the tools that deliver tangible results for your business.
3. Don’t Ignore Tax Planning
Small business owners cite business tax planning as one of the most stressful aspects of running a business. That’s because they don’t really have a plan.
They realize that they have a huge bill to pay because they didn’t take tax planning into account.
The best way to avoid that fate for yourself is to think of business tax planning throughout the year. Work with a professional to help you maximize the value of your business and limit your tax liability.
4. Create a Savings System
A savings system helps your business become profitable from the first day. Use a system like the Profit First system, where you set aside a percentage of revenue for operations, taxes, profit, and your salary.
You’ll be able to manage your income better and have money set aside if your revenue suddenly drops.
5. Use a Profit and Loss Statement
A profit and loss statement lets you see what’s really happening in your business. You see if you’re running at a profit or a loss.
It can get hard to tell what’s going on when you only look at your books to see how much you have in the bank at that moment. This is why you have to have your own Excel or Google Sheets Profit and Loss template to record all your revenues, costs, and expenses.
Use one on a monthly basis and make decisions according to the results.
How to Master Your Business Budget and Finance
It’s harder than most people realize to run and operate a small business. Most people can’t handle the financial stress and uncertainty. That’s why they work for someone else and you work for yourself.
You can get a handle on financial stress by coming up with a budget and finance plan for your business. Follow the tips in this guide and you’ll be on your way.
Ready for more tips to help you in your business? Head over to the home page of this site.
