Budget your business
Rebecca asks Dave, and Certified Business Coach Christy Wright, what tools are available to help budget for her business. Dave and Christy give her two ideas that work well together.
QUESTION: Rebecca asks Dave’s guest, Certified Business Coach Christy Wright, what tools are available to help budget her business. Christy and Dave respond with some great advice for entrepreneurs.
ANSWER: I advise women I work with to use EveryDollar, because you can use it for a business, as well. Dave, do you have something else that you recommend for businesses? At this level, if it’s a small business, it’s usually pretty simple.
Dave: The first step would be to use the Profit Potential tool, which is free on Christy’s website at businessboutique.com. It helps you calculate and forecast your revenue, and even your cost of goods sold and gross profit — which is revenue minus your cost of goods sold. Then you’ve got overhead items, and they’re estimated with that tool, as well. That’s a good, kind of rough and dirty, quick start.
Then, you just want to use the same principles as EveryDollar. Christy’s exactly right, because that’s what a budget is — you’re looking forward and asking what your revenues and expenses are going to be, and thereby what are your profits for the coming month, the coming quarter, and the coming year.
The newer you are at business, the more this will be just a guess. But every month that you do this, you’ll learn to adjust. After you’ve run the business for many years, your budgeting will be very, very close. All you’re doing with budgeting is forecasting. You’re saying what’s going to happen with expenses and gross revenues, and thereby what’s going to happen with the profits. That’s a big deal.