3 Categories to Include in Your Business Budget and Why You Should Think of a Budget Different Way
In business, budget is not a dirty word. A budget is a tool that helps you to allocate your resources. A budget is a tool that helps you ensure your business' future.
For a startup, money may be tight. You've probably heard though, that to make money, you have to spend money. This is possible if you're intentional about the cash that goes out, and the cash that comes in. And I believe a budget helps a business owner to be intentional about what they spend and how they spend it.
There's this popular notion that it is possible to start a business without spending money. As a coach I'm not fond of that message. I’m not sure who started the message, or where this crazy message started. But I do know that after 11 years of being in business and coaching other women to start their businesses, it’s just not true.
A key to success is working out a budget that helps you to buy what you need, to invest in your business, even if that means making investments that seem large at the beginning, but that pay out over time.
Starting a business is hard enough without the expectation that you don’t have spend any money hanging over your head. I want women to offer a more practical perspective. I want women to set realistic money expectations from the start. That's why I'm writing this post today: to help you envision what your business budget should look like.
What Should Be In Your Business Budget?
There are three big categories that I advise my clients to include in their startup budget. They are: marketing costs, developmental costs, and operational costs.
1. A Line Item for Marketing:
Marketing is a key piece of business visibility. Your marketing money can go toward networking fees, social media ads, flyers, business cards, email marketing and social media posting software, even graphic design software. If you want to make money (and who doesn't want to make money?) you need to do some marketing.
2. A Line Item for Development:
Business and professional development costs would fall into this category. This can be allocated for business coaching, training courses, professional certifications, and educational materials. Often, this budget category can change. It's not unusual for business owners to see this number as a larger amount at the launch of your business. That doesn't mean that since you're up and running this should disappear. Make sure you include at least a small amount for ongoing education and training.
3. A Line Item for Operations:
This is another category that can be larger at the start, like when you're setting up a website (especially if you're working with a designer), securing a domain name (website URL) and the security certificate that Google now requires. This will be the category to allocate costs like online scheduling system fees, website hosting and theme fees, fees for Gsuite (Google's apps for business,) cell phone charges, virtual meeting software and other items you use to fun your business.
I think it's important to change the way we look at budgets. The change can be help0frul9 for startup business owners. Too many people (especially women) think a budget is some k8ind of device that tells you what you can do and limits you from doing others.
Coach Erin's Budget Story
I get it. I thought of a budget as a “restrictive” device that didn't allow me to spend money. Until I created a budget. Here's my story:
For years, my husband I didn't have a functional budget. We had a “budget” (you know a piece of paper with bills and paycheck dates.) Finally, we created a real budget.
We developed a system that not only told us when money was coming in and going out -- but helped us plan on how, when and how much we’d spend. We could see how spending $20 today could affect things weeks, months and even a year down the road.
We went from “being on a budget” -- like it was some type of restrictive “diet” plan to being savvy spenders. We gained control over our money. Budgeting is now fun, easy and pretty dang simple for us.
I now say thank goodness for my budget, because it set me up for money success in my business. And you can too.
It's very important for business owners to stop wasting time worrying about money and spend more time planning for money. There are many reasons a business owner mighty get into this trap. Sometimes it’s a mindset issue; business owners think: “I’m not making enough to worry about.”
Other times, the issue is more serious and borne from avoidance: "don’t make me look at the numbers -- they're not good.”
I want other women to free themselves from their negative beliefs about budgeting. I want women to be smart, savvy and empowered spenders. I want them to know that budgeting isn’t something you do “once you start making money.” It’s a piece of the business planning stage; one of the bricks of a solid business foundation.
To make sure that piece is there, you need to set up a budget and change the way you think of the document. Think of it as a guide that will help you to more easily manage your money and to succeed financially.
If you’d like support in setting up you and your business for financial success I highly recommend Fiscal Fitness. Their team is awesome! They have helped many of my clients set up successful business budgets. They’ve also helped clients manage their day to day money, save money and even reduce debt.
Oh and of course, I’m here for you too. Helping my clients estimate the costs of services, programs etc they will want and need for their business is a common coaching topic. Schedule your Clarity Creator and let’s get you prepared to launch a financially sound business.