Local businesses are the backbone of this country. The dedication, creativity, and perseverance of local business owners are key pillars of any community. Growing businesses face numerous outside challenges including a changing economy, large chain competition, and economic trends.
However many growing companies face challenges from within. One such challenge is proper budgeting. As your business grows and evolves, so must your budget. Check out the five important business budget line items you need to know before you start budgeting.
Ready for a partner that puts your business first? Contact Union Community Bank Main Street Bankers today.
Five Important Business Budget Figures
Figure Out Income Sources
Whenever making a budget for the upcoming year, one of the first things every business, no matter the size, needs to determine is how much money they are bringing in on a monthly basis. Begin by looking at your sales figures and then add any other income sources that you use to run your business. This will help you determine if you need to look at outside sources to maintain your cash flow throughout the year.
Need cash flow for your business? Check out Union’s Business Line of Credit options.
Income Sources might include:
- Service fees
- Products sales
- Investment sources
Determine Fixed Costs
The next figure to look at when budgeting is your fixed costs. Fixed costs are expenses that cost the same amount every month. These are the easiest cost to predict in your budget. However, even though these are costs that are supposed to be the same, it’s possible that they’ll change during the year. For example, if your company is growing, you might need to hire more people so your fixed cost for salaries will change. Or you might need to move into a larger or different facility, so your rent or mortgage could change. Take a realistic look at your growth potential for the year when budgeting, so you can plan ahead for these possibilities.
Think it might be time to move your business into an office? Read the 5 Signs Your Small Business Needs More Office Space.
Fixed Cost items might include:
Plan for Variable Expenses
Once you’ve figured out what your fixed costs are, you need to determine what your variable expenses are. A variable expense is an item that doesn’t have a fixed price tag every month. Depending on how much business you are generating, you can increase or decrease this expense.
Want a checking account created with businesses in mind? Open a Union Main Street Business Checking Account today.
Variable Expenses might include:
- Raw material
- Contractor wages
Predict Capital Expenses
As your business grows and changes, there will be a number of capital expenses you need to account for. Some will be ones you can plan, others may come up unexpectedly. Making a plan for one time purchases you can see coming, and then allowing some wiggle room for the unplanned ones will help protect your budget throughout the year.
Need the funds for a larger one time purchase? Learn more about your loan options with a Union Business Term Loan.
Capital Expenses might include:
- Office supplies
Partner with Union
Union is a community bank. We live and work in this community and believe in helping you succeed. What other benefits are available for small business owners that bank with Union?
- Commercial Real Estate Loans to provide funding for real estate development, single use or multi-tenant facilities and residential apartment financing
- Cash Management Services like ACH Direct Deposits, Collections, and Merchant Services
- Business Services that include eBanking options and Retirement plan services
Contact a member of our Main Street Business Banking team to learn how we can help support your business as it grows.