A budget is a detailed document showing the spending and revenue of a business. It concentrates more on reporting expenses and trying to control them. Its a reporting and controlling tool used widely amongst businesses of various kinds.
Yes, budgets are a great tool to keep all expenses in ‘control’ but are they necessary for a startup? For a startup, budgeting should not be a priority. At the ‘startup’ stage, you don’t have much to budget about. Whose expenses are you going to control? Yours? Or another 2 – 3 employees?
Creating budgets, perhaps, will be useful when you are a few years into your venture. A static budget at an early startup stage is of no use.
So what startups need to do is not ‘budget’ but ‘forecast’. Forecasting is more flexible, dynamic and relevant to a startup. It is less rigid and detailed, and can be updated regularly to reflect changes in the company.
The article below explains the importance of forecasting for a startup and how it can be done:
Starting up a business can be an exciting and challenging process. Right from arranging funds, market research and product development to building a team and accounting for day to day expenses – the entire process can be cumbersome, overlapping and time-consuming.
To make your life a bit easier, over here we have listed the basic tools and tips you need to follow to manage your expenses and accounting:
1.QuickBooks - Have your startup’s financial information right on the computer screen. This is a must have for all startups and small businesses. Create bills, invoices and even tax preparation and layout – we highly recommend QuickBooks for all startups.
2.ADP or Ceridian - Both ease the payroll services of a startup. From payroll processing to employee payroll tax filing, all available through a single software. Sign up for either of the services right away.
3.Don’t mess with the Revenue Services and make sure you pay all your taxes on time. Stick to be conservative.
4.Keep Receipts for EVERYTHING. From the small expenses to the slightly bigger ones, make sure you keep a track of all. As a startup, (or even otherwise) every single penny counts.
Businesses spend money before they even open their doors. Start-up expenses are those expenses incurred before the business is running. Many people underestimate start-up costs and start their business in a disorganized, unplanned way. To determine your startup costs, you must identify all the expenses your business will incur during its startup phase. A critical factor in determining these expenses are the length of time it’s going to take to open your business.
It is true that every business is different and has its own specific cash needs; therefore there is no generic method for estimating your startup costs. But the article below makes a good attempt in breaking down the mystery and creating a clear picture of expenses that your startup will need.
A timeless and probably a cliché suggestion but “Beware of the little expenses; a small leak will sink a great ship.” – Benjamin Franklin
No matter what your business type, take into account everything you will spend, from the moment you dig in to the startup process, through the time you're ready to sell a product or service. If you need three months from the time you sign a lease to the time you can put the "open" sign on your retail storefront, calculate how much money you will need for salaries, electricity, rent (and your mortgage payment!) during those three months.
