Budget planning for businesses
Updated: Mar 3
The budget is defined as an estimate of income and expenditure for a set period of time. The ideal budget of a business will allow you to cover your expenses and give you a profit.
in order to decide on the budget needed for a business, it is important to take into consideration both the incomes (what you get from selling or external support) and outcomes (what you spend on for creating your products or services).
Outcomes are the costs needed in order to be able to produce a product or offer a service. The types of outcomes are totally dependable on the type of activity you do and its requirements. A general list would include:
Materials and goods
Needed raw materials
Other materials: gas, spare parts, stationary, consumables, etc
Third parties services
Rent, utilities, telecommunication, security, waste collection, etc
Insurance, maintenance and repairing, transportation, accommodation, etc
Publicity, consultancy, etc
Salaries and taxes
Meal tickets and other benefits
Relation with banks
Current bank services
Differences from exchange rates, interests, etc
Relation with the authorities
Different type of taxes on means of transportation, terrains, buildings, etc
Current income or sales taxes
Calamities, force majeur
In order to obtain profit, the outcomes should be smaller than the incomes. When establishing the price of your product or service, take into account all the expenses you have to create it (utilities, rent, salaries, materials, etc.) which leads us now to the incomes you can have from your business.
The outcomes of a business consist of the money you can obtain by selling your products or services, from other types of financial activities or grants alike. Likewise for the outcomes, the incomes depend on the type of business you have, and a general list of them could be:
The output of your business (what you sell)
Exchange rates differences, bank interests, bank deposits, etc.
Third party financing
Grants, subventions, subsidies, etc.
Bank credits, loans, etc.
Try to make your personal budget first and see how your financial planning goes. It will make it easier for you to understand the process!