Budgeting is crucial for small business owners and freelancers. Planning a budget can help improve cash flow and allow you to plan for specific expenses, overall ensuring profit. However, developing a budget that suits your needs can be difficult. That's why we are here to help, providing a step-by-step guide so you can get started today.
Understand Your Business Income
One of the most important elements of developing a budget is ensuring you accurately estimate all of your sources of income. Take a close look at the ways you earn - clients, projects, retainers, passive income streams, etc. This helps you make informed decisions and be more strategic about allocating your resources.
Steps to help you get started:
First analyze around 6 to 12 months of income, to determine any patterns.
Calculate your baseline monthly income using your lowest earning month.
Determine a list of your essential expenses such as rent, utilities, etc.
Once you have completed these steps, make note of any irregular income or seasonal fluctuations.
Smooth out any fluctuations by calculating your average income from these months.
With this information, you can determine how much of your income you can set aside for savings and how much you can reinvest in your business.
Create Your Budget Template
One tool that might be helpful when creating a budget is a spreadsheet. Here are some suggested sections you may want to include in your spreadsheet:
Income: this may include client income, product sales, passive income, or other sources.
Fixed Expenses: this section would include any recurring charges that you can expect on a monthly/weekly basis. Such as rent, software subscriptions, internet, etc.
Variable Expenses: this may be things such as marketing and advertising cost, travel, and supplies.
One-Time Annual Costs: Examples of these costs include equipment purchases, courses, workshops, licenses/permits etc.
Profit: This is what is left after you subtract all your expenses from your total income.
How Invoice Home Can Help
Although Invoice Home is great for creating professional and unique invoices, it's also a great tool for tracking expenses. When you create and send invoices through Invoice Home, your income is automatically logged. We track all your expenses and outstanding payments in real time, making them accessible on your account whenever you need them. This allows you to monitor your revenue and help you make important budget decisions. When you're ready, you can use our 'Reports' feature to export your data, streamlining the budgeting process and reducing the time spent searching for and recording information.
Conclusion
Budgeting is essential for small business owners and freelancers, looking to grow their business. This may seem like a daunting task, but tools like Invoice Home can significantly simplify the process.
If you have any questions about how invoice Home can help you please email support@invoicehome.com.
