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Create a business budget with some guidance from Vito Proietti

Most small business owners are self-made entrepreneurs without any formal education or training about the process of starting and running a business. They learn while working and seeing others and have their ways of acquiring the skill sets that are relevant to the business. Most of them rely on their business acumen and gut feeling to run the business. While doing everything independently and become aware of the formal business structure generally taught in the business schools, observes Vito Proietti. 

Regardless of their background, every business owner is aware of a budget’s importance to create a business plan. They must have some knowledge about business finance that forms the foundation of the business budget. Budgeting is critical because it establishes the parameters for setting the revenue targets for a healthy bottom line.

For creating a business budget, the steps described in this article will make the task easy.

Vito Proietti advises following the industry standards

Despite the differences in business infrastructures within the industry segment. All businesses share some commonalities that have created. An industry standard that serves as a benchmark for creating a business budget. The internet is a vast resource of information about the ways of creating a business budget. And you can gather more insights from the practical experience of some local business owners. The IRS website helps learn about the revenue allocation to various cost groups, and books available in the local library help learn the budgeting techniques. Instead of looking for specific figures, follow the industry average as it can help to cover. Any unexpected business setback says Vito Proietti.

Use a spreadsheet for data tabulation

When allocating costs based on funds availability, tabulate the figures on a spreadsheet to ease the process of determining the percentage allocation under the variable cost heads, which includes all costs together with raw materials. Follow the same method for allocating the fixed costs or overheads that include rents, insurances, taxes, etc. The knowledge of creating a budget helps to take a methodical approach.

Maintain some margins

Budgeting is an exercise based on certain assumptions and presumptions. And historical data acts as a benchmark, and the figures are subject to revision after periodical reviews.  Therefore, the budget should have some flexibility built into it to accommodate the ongoing changes.  Keeping some margins can provide flexibility. As there would be the scope of earning additional revenue or maintaining adequate financial reserves that can help meet the plans for growth. And expansion, explains Vito Proietti. 

Focus on cost-saving

To achieve the goal of increasing revenue as provisioned in the budget, you must focus on cost-saving.  Saving is equivalent to earning some extra revenue during difficult times. The fund generated from cost saving projects should come in handy to meet various expenses like meeting some immediate liabilities of bill payments or seizing some unexpected business opportunity that can result in windfall gains.

Close monitoring of the budget will narrow the gap with the ground reality through fine-tuning so that the figures resemble the accurate picture of the business.