Step 1. List the item and keep track of the expenses in your business. Include vendors you will use, employees and sub-contractors. This will create your chart of accounts when you set up your bookkeeping system. You will add or subtract from this chart as you get your business up and running. Keep a running total for each week then add the totals for the month.
Step 2. Now make a list and keep track of all areas of income in your business. You want to know the sources of income and which areas of the business are your best money-makers. Keep track each week and then add up the income totals for the month.
Step 3. Calculate how much money you actually made each month. Do this by taking the total of your income and subtracting the actual amount spent (for that month). You want to know the difference between what you brought in and what was spent to tell you the profit or loss for the month.
Step 4. Keep an eye on the amounts left over each week in your categories on your chart of accounts. That is done by noting the amounts in the accounts compared with the expenditures for each category at the end of the week or month. A negative balance indicates you are losing money in that category. A positive balance means you have money left over in any category. This is your surplus for that category.
Step 5. Continue to review your budget on a regular basis and at least once a week. You want to keep track of the money flow in and out of your business. It will take at least a year and maybe up to three years to understand your spending cycles and be able to do real financial analysis in your business.
Step 6. Analyze financial results on a regular basis. If you regularly find a surplus amount on an expense category, analyze why this is. Be careful about making assumptions about surpluses or large expenditures per each category. There could have been circumstances to make this happen such as it being a short month, downturn in the costs in that category or another factor. The next month might be different so you want to wait to find an average.
Step 7. Readjust categories as feasible. After doing the analysis in step 6, you might want to readjust some of the budget categories by putting more money in some categories that are directly helping the business to grow and taking some out of categories that do not need as much funding.
These seven steps will help you have a healthier financial beginning for your business. As you work with budget decisions as a business woman you will be able to better anticipate your financial needs in the business. Learning the numbers will be the basis of your success in your business leadership abilities.
Consuelo Meux, PhD. owns the Confident Business Women programs for women who are determined to succeed in life and business. Women learn to embrace levels of confidence needed to maximize success and to live an authentic life on purpose. Find out about the upcoming Embracing Confidence Program or join the monthly Confident Women Cafe. Go to the website to find out how at http://www.confidentbusinesswomen.com