Start-up Operating Budget and list of Personal Expense
In the course of running your business, you will have to deal with not one but two budgets: one for your business and one for yourself.
A business budget is also referred to as an operating budget, and it differs from the budget you developed for your start-up costs for several reasons: After operating your business for even a short time, you will have a much better idea of where the money goes, as well as what comes in. You’ll also have some sense of when the money tends to arrive in your bank account, so you’ll also know when you can expect to be able to pay your own bills.
Essentially, a budget is a projection of the revenue and expenditures—and all the subsequent profit—over a period of time. A budget is usually structured to highlight the differences among each month’s expense categories as well as providing a cumulative overview so you can see how much you’ve spent, for instance, on office supplies or rent over the course of a year. An operating budget should provide an entrepreneur with a sense of discipline when it comes to spending the business’s money. In a way, an operating budget provides you with an at-a-glance snapshot so you can see how your projections are panning out and where adjustments—if any—are needed.
For instance, your fixed costs can’t be changed, but if you’re working constantly and productively, but still aren’t generating enough cash to cover all of your expenses each month, a quick glance at your budget can help inform you to make one of several choices:
- Increase sales by raising your prices, selling more to each customer, expanding your market range
- Cut expenses by opting for part-time rather than full-time help, or reducing nonfixed costs
- Allow more time for the market to become aware of you, and wait out new purchases, improvements, and growth
Your Operating Expenses
None of these are easy choices, of course. But developing and then keeping track of your operating expenses will help secure a great future for your business and yourself.
Overhead
Salary
Mortgage/rent
Property taxes
Insurance
Utilities
Heat
Office Expenses
Telephone line
Fax line
Credit card commissions
Postage
Stationery
Office supplies
Printing
Professional Expenses
Dues and memberships
Accountant fees
Attorney fees
Independent contractor fees
Office Equipment
Copier leases
Computers
Printers
Software
Company Vehicle(s)
Loan/lease payment
Registration
Insurance
Gas
Repairs/maintenance
Employee Expenses
Insurance
Workers’ compensation
Bonuses
Employee discounts
A Personal Budget
Although this is a guide to starting a small business, it’s important to keep tabs on the money you spend on the personal side of the ledger. If you’ve never kept a budget for your personal life, now is the perfect time to start. You’ll have to account for and keep track of every penny you spend in your business; doing the same thing when it comes to your personal life will help you to manage your money better all around. Plus, it will mean you’ll have more money to invest back into your business; people who stick to a budget tend not to fritter away their money.
It’s a good idea to prepare two personal budgets: one for how you live now, and one that you will use once you have started your business. For instance, once you start working at your own business full time, you may decide that you no longer need to spend $400 a month on new clothes, especially if you’re going to be spending most of the day working at home by yourself. On the same note, the amount you budget for lunches out may be totally eliminated in your personal budget, but may increase in your business budget. After all, if you need to entertain current and potential clients over lunch, part of your restaurant tab can be treated as a business deduction; it’s a good idea to check with your accountant to see the percentage you’re able to deduct.
Your Personal Budget
Fixed Monthly Expenses
Housing
Utilities (gas, electric, phone) .
Food
Car payment
Credit card payments
Health and medical expenses
Savings and investments
Clothing
Student loans/education expenses
Miscellaneous
Now add up the totals. Where can you comfortably cut expenses?
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