While some of the best businesses may have started out of passion, profitability is the reason they managed to stay in business long term – and the ability to budget is an elementary part of that. It helps to determine how much you may be able to spend on things such as inventory, wages, infrastructure, marketing and other necessary business expenses without hurting your profit margin.
To take the hassle out of building complex budgeting spreadsheets, Google is offering a number of free budgeting templates for business purposes. You can also take it one step further by engaging applications such as PlanGuru. These allow you to create budgets, track your expenses and determine your profit or loss each month, which can help you create more accurate financial forecasts for your business and optimise your business strategy accordingly.
In addition to budgeting, it pays to maintain a sales forecast. If you’re not sure where to start, you can find a number of useful (and free) templates around the web. This will help you predict future sales and, therefore, income by comparing existing data you already have. For example, through a week-on-week, month-on-month, or even year-on-year comparison.
As you build up a bigger picture, it becomes easier to look back and identify things such as the most profitable areas in your business, why they are doing well and where you should potentially invest moving forward.