A small business owner must take affirmative steps to protect the company assets. Of the several types of financial controls used by small businesses, these two budgets represent the minimum oversight required of all owners. Anything less and you are putting your business at risk of exceeding your financial limits. This can do serious damage to your firm. These budgets should also serve to reassure owners that they are on the right financial path.
Income and Expense Budget
You begin by estimating monthly income for the next 12 months. Sure it’s only a guess, but it should be an informed one, neither optimistic nor pessimistic. Your spreadsheet should layout your monthly estimates in one column, leaving the next two columns empty for now – they will list actual income and the difference between your estimated and actual income, respectively. You now can tell at a glance whether your revenue expectations are being fulfilled.
Set up your expense columns in the same way.
The best case scenario is to have very small figures in you difference columns, as this would signify a good ability to realistically project your company finances. It’s nice to have a surplus of income and lower-than-expected expenses, but if you get that result every month, go back and re-estimate – it’s best to be accurate.
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