Plan Your Budget Payments Before You Open for Business
Before you can make money, you need to know how to spend it wisely- which is why it’s important to budget payments very carefully to ensure that you end very month with positive cash flow. The sooner you begin planning out your budget, the healthier your business will be as the scale of expenses for a fledgling start-up gym or fitness club would usually be much lower compared to a large scale or franchise business. By committing to drafting out your budget payments every year, you’ll have the ability to track the amount of cash you have on hand, your actual business expenses as well as constantly have a rough idea on how much revenue you’ll need to maintain a healthy business.
Planning Budget Payments to Minimize Risk
Cash-rich businesses may balk at the thought of having to manage yet another spreadsheet, but according to the U.S. Small Business Administration, careful budget payments can be an indicator of:
- The actual funds needed for materials or labour (in setting up a business premise)
- The actual start-up costs for new businesses
- The actual cost of operations
- Minimum revenue necessary to support the business (we have discussed the breakeven point previously in Day 2).
- A realistic estimate of your profits
Components of a budget should include your business earnings and expenditure figures. This would then allow you to calculate your cash flow so you can immediately deduce whether or not you’ll have any spare capital to rollover to the next month. While most budgets are done on a yearly basis, your budget should be detailed enough to include columns for each month of the year.
For more information on elements to include when planning your budget payments, please view this article by Inc on starting a business budget.