It can be tricky predicting revenues and expenses when figuring your small business’ startup budget. In many cases, startups already have the disadvantage of a shoestring budget, but setting aside enough cash to get you through the basics of your first year can lead to positive outcomes if done correctly. When creating your first small business budget, it’s vital to include these basic business expenses.
Some costs remain the same month after month, making it easier to plan for them in the long term. First, factor in the rental cost or mortgage you pay for your work space, and overestimate the amount you’re set to spend on utilities. This means requesting typical energy and water costs from your provider and planning on spending more than the average small business bill. Salaries that keep your staff well paid and morale high need to figure into the equation, as do internet costs, government and bank fees, cell phone bills, and website hosting. To ensure your company follows all required regulations, you should also include costs for accounting and legal services as well as liability insurance for your premises and insurance that covers theft and property damage.
Variable costs are expenses that change from month to month, making accurate forecasting for your small business budget very important to your bottom line. As with fixed expenses with variable billing, it’s best to overestimate these costs to prevent you from falling short. Some of these costs include raw materials you need to make the products you offer for sale, transportation and freight to get your products to customers, and travel and events that help you promote your burgeoning business. You should also factor in contractor wages and commissions, such as delivery personnel, professionals not on your regular payroll, and sales people, advertising and marketing costs, and printing services for mailings, manuals, and other key workplace documentation.
Ensuring production means spending money on one-time expenses, including machinery for producing your goods and appliances to outfit employee lunch and break spaces. You also need computers, printers, cell phones, tablets, and other key electronics to equip your employees with the tools needed to do their jobs. Desks, chairs, mats, filing cabinets, and cubicle dividers also comprise some one-time expenses your small Canadian business faces at the onset. Be sure to also include software licenses for operating systems, customized invoicing, and video or photo editing software for your marketing department. Office supplies are also a variable cost, and this includes paper for printers, pens and notepads for workers, whiteboards for conference spaces, and supplies for filing.
While starting your own business can be a scary and challenging proposition, it can also be a very rewarding experiences that enhances the lives of you and your workers. Understanding the expenses required to get your startup business off to a great start can give you a leg up on the competition and prepare you for growth as your sales increase and your expenses decrease. Boosting your financial literacy can prove an excellent choice for your business, and adding some padding by overestimating expenses and underestimating revenues can reduce the risk of surprises in the long-term.