Budgets

By means of budgets it is possible to calculate how much it cost to set up a
business. And how much it cost running the business.

Budgets are for many entrepreneurs one of the worst things about starting.
They are afraid of it and think that only accountants can make budgets. It is
not true. Budgets are rather simple to make. It is simple addition and
multiplication. Just take one expense at a time.

Budgeting is easy
For a start up company you might need to purchase five chairs for the office
at 50 $ each.
The line in the budget will say:

• 5 chairs x 50 $ = 250 $.

Other expenses must be calculate the same way.
When you have gathered all your expenses you add them together. By
doing this you have made a budget for all your expenses.

Budgets are tools you need in order to figure out your business's
establishing and operating cost.
If you are able to use a spreadsheet it becomes much easier to make your
budgets.

Spreadsheet
A spreadsheet is a computer program like e.g. the word processing
programme Microsoft Word. Word helps you create text.
Microsoft Excel is a spreadsheet programme. Excel helps you calculate
figures – and then also a budget

Basically, you need three budgets:

Establishing Budget
In order to estimate how much money you need before the start-up of the
business, you must work out an establishing budget.
The establishing budget provides an overview of necessary expenses
incurring up until business start. It is not until after start you will be able to
gain an income.

Operating Budget
The operating budget provides an overview of the costs of running your
business. The operating budget gives you an overview of the company’s
day-to-day expenses. It also gives a chance to calculate an estimated
turnover.


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