Creating a Balanced Budget Proposal in 3 Steps
When it’s time to draft your budget for your new business, you’re completely overwhelmed. If you feel like you did the first time you had to grocery shop for yourself, don’t panic. Instead, use these steps to guide your planning.
1. Focus on Raw Materials
Your priority is creating great products that your customers will buy, so you should figure out your budget for raw materials before anything else. Assess your options for local vendors versus online suppliers, and consider eco-friendly options. Don’t forget to leave room in this part of your budget for transporting goods. For example, if you manufacture reusable water bottles and purchase your plastic pellets online, you have to pay for shipping as well as the goods themselves. Similarly, if you’re opening a restaurant, you need to include the cost of hopper bottom carriers bringing you wheat and corn.
2. Focus on Premises
You have more flexiibility with purchasing premises than raw materials, since you can operate out of your home for a while if necessary. Still, finding a permanent location for your business should be near the front of your mind when you make your budget. Estimate how much space you need for manufacturing and sales or how many buildings you need to house them separately. Use real estate websites such as Zillow and Redfin to learn the asking prices in your area.
3. Focus on Employees
How many people does it take to run your business in the early days? If you and a partner can handle all the tasks, then your budget here is small. However, if you have a large operation or a complicated assembly process, determine how many extra hours a day of work you need to pay for.
By using these three steps, you craft a budget propossal that focuses on what’s most important at your company.