Learning about finances is just like eating vegetables: no one really wants to do it, but we all know we should. The same is true for talking about how to create a budget for your business. It isn’t sexy, like how to increase your income and followers, but it’s key to your success as a work-at-home-mom.
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Not setting aside money for your work-at-home business is one of the most common mistakes I see among mompreneurs. It stinks, but the raw truth is, it takes money to make money. No matter what kind of business you have, you need a financial plan, which means creating a budget with as much detail as possible.
The question is, how?
It’s different than setting personal financial goals or a home budget since you may not have bills rolling in every month to help you plan. In fact, you may not even know how much money you should be setting aside and/or investing. The good news is, you’re the boss so you have the freedom to make plans and adjust them as needed.
Before you start crunching numbers…
If you’re new to running a home business, you need to get some things figured out.
First, talk to someone who runs the same type of business you do and gather some ball-park figures. Ask:
- How much to expect to spend the first few years
- What kinds of expenses to anticipate
- Which expenses are non-negotiable and which can be eliminated
Second, talk to your spouse or significant other.
This might be a chicken-and-egg situation. You may want to have some hard numbers to approach them with, or you may want to discuss the budget from the very beginning. The point is, your spouse must be on board with the fact that you will need to spend money.
How to Create a Budget for Your Business
Assuming you’ve already talked to someone else who does what you do, gather your own data. You’ve been saving receipts, right? (If you haven’t been saving receipts, start now!)
You need a realistic picture of what you’ve already spent. Then ask yourself these questions:
- Is this amount more or less than what you thought?
- What expenses haven’t been included that you need to add?
- Were your expenses front-loaded or are they recurring?
Plan Expenses Going Forward
What have you not spend money on that you need to going forward? Here are some common expense categories:
- Training and development–classes, seminars, webinars, books, conferences
- Office supplies–toner, pens, files, labels (I love me some office supplies!)
- Technology—computers, printers, cell phones, software
- Personnel–virtual assistants, hired help for household duties and/or childcare
- Travel–mileage, hotels, meals
- Subscriptions–professional magazines, recurring expenses such as social media aids BoardBooster, Tailwind, Mass Planner
- Professional dues–membership to organizations that further your career
- Advertising–Facebook ads, marketing materials
- Materials–if you produce a product, you need raw materials
Of course there are a multitude of expenses not mentioned here. Much will depend on what kind of home-based business you run. For example, a fitness coach will need fitness clothes and possibly weights and such. You get the idea.
Make a Plan
Once you know roughly how much money you’ll need overall, you need to break it down further. Define whether expenses are:
Then you need to decide HOW to pay for each item on your list. Where will the money come from–checking account, Paypal, separate business account?
**Most people starting out do not have a separate business account but it’s a good idea to establish one**
You may need to consider a good budgeting tool to help you stay on top of your income and expenses. The more detailed you are, the better.
Consider these helps as you create a budget for your business:
A Few Last Tidbits When Creating a Budget for Your Business
The first thing to remember is that you’re the boss! Be a kind one 🙂 There are a few other things to keep in mind:
- Weigh your budget in light of your income
- Decide how long your budget can be sustained based on income projections
- Have a backup plan to cover expenses on lean months
- Make adjustments as new information comes to light–your budget can be flexible
- Keep your spouse in the loop
- Don’t feel guilty about spending on your business
Did you catch that? DON’T FEEL GUILTY about spending money on your business. It’s necessary! If you build your business on a cheap foundation, it will show.
While creating a budget for your home business isn’t the most fun thing to do–again, we’re talking vegetables here–you’ll be glad once it’s done. You’ll better position yourself and your business for success!