December 6, 2021


Accounting + Finance Blog

Prepare Small Business Budget with these easy steps

Prepare Small Business Budget with these easy steps

A small business budget is one of the accounting structures that must be put in place. Generally, a master budget that contains the profit or loss budget, cash flow budget, and balance sheet budget is usually prepared for the coming year. However, the master budget is streamlined into a monthly or weekly budget. In most cases, an expense or expenditure budget is prepared. Therefore, this article is concerned with how to prepare the weekly budget.

First of all, a budget is a quantitative plan of what a business or individual thinks he will earn and spend for a particular period. More formally, a budget is an estimate of income and expenditure a business will earn or incur in several periods.

Writing out the Small Business Budget

The first step is to know all expenses that will be made in the week or month. Some expenses must be made every day, such as paying for repairs and fueling of office vehicles. Fueling and repairs of generators, certain office expenses such as refreshments for staff, maintaining office appliances like the computer, recharging office phones, paying for internet services, just to mention a few.

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You have to figure out all the expenses that occur every day in your entity. Normally, these expenses should have a fixed budget. For example, the fueling of the generator may be fixed at 5000 Naira every week.

The next step is to figure out other expenses or expenditures that may occur in the week. You will add them to a budget when you are sure they will occur. A computer in the office may not look good. If so, it needs replacement, so you will enter the amount to buy a new computer in the budget.

After writing out the expenses and expenditures you will insure for the week, the third step is to write them down. Here you should have a budget format. Mostly an MS Excel or Google Sheet template. Owning such a template will help you use it consistently. So preparing your budget weekly or monthly won’t be difficult.

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Follow up the Small Business Budget

The fourth step in a budget is following the prepared budget to the later. Failing to do this is similar to preparing a delicious jollof rice and not eating it. You have to eat the budget you prepared. Ensure that all expenses are within the budget. An expense budget must not be rigid. For instance, there may be situations where an expense will pop up that is not in the budget. If it is possible to move it to the following week or month, please do so. If not, then you should include it.

Setting Control in the Small Business Budget

Ensure that you follow the budget and have a space in the budget where the actual amount spent is written. At the end of the week, check the amount you have budgeted and the actual amount spent. The differences are called variations in accounting parlance. It is important to watch variations. It is a guide to the next budget. It helps you to know if to increase or decrease the budget amount for a particular expense. It will also help you if you are spending unnecessarily on particular expenses.

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In final words, budgeting helps you plan your expenses. Remember that a person who fails to plan plans to fail. When you budget your expenses, you are planning to succeed. From the budget, you know where unprofitable spending is done and look for ways to free up those expenses. While focusing on the more important ones.