New Business start up: Business Budget

Well, everyone that has ever dreamt of starting their own business and started it would have thought of how he or she will survive before the company starts making money enough to pay a decent salary or wage! This is especially important if the business will take some months before it breaks even and starts having a decent turnover. You may find that you may need to find alternative sources of income to cover the bills and expenses incurred in the new business.

You may also have to cover your own personal expenses too. When your business starts making a cash-surplus, you have also have to think of how to re-invest it or seek further funding for your business for expansion. You have to forecast your own personal financial needs - You will need to draw up a Personal finance budget. This budget needs to be realistic and specific. There are some of your current expenses i.e. personal expenses you can do without for the meantime such as travel and leisure. Your personal plan should consist of the amount of money you will need to take out of the business or find from another source for your personal living expenses. It is important that you set yourself limits as to the amount that will be sent on food, rent and general housekeeping

Expenses in budget can include the following headings – Rent/ mortgage , Utilities bill (e.g. electricity, gas, etc.) ,Council tax Telephone/internet bill, Food /general house keeping , Property insurance, Car maintenance ( includes fuel , MOT etc. ), Television license, Car tax and insurance, loan repayments, credit card repayments, Leisure / travel, Travel expenses , Clothes , savings plans, life insurance and Other expenses not mentioned. You can adjust the headings above to suit your lifestyle and the total up how much it will cost per month then multiply by 12. This will show you much you will need to live on for the first year of your trading.

As I said earlier, it is important to be realistic with the amounts and also set a limit for your self on not so important headings such as leisure /holidays. Since the first year of trading is so important you will have to accept some sort of financial sacrifice , even though it won’t be easy but it is required, if you are to make a head start with your business !