Creating a Budget for Your Business

Creating a budget is an important part of starting a business and should be included in your business plan.

| July 10, 2013

Grow Your Handmade Business

Get practical advice on starting a creative business in “Grow Your Handmade Business.”

Cover Courtesy Storey Publishing

Expand your business beyond the dining room table with the coaching of Grow Your Handmade Business (Storey Publishing 2012). Author Kari Chapin shows you the nuts and bolts of starting a business, from mapping a business plan to addressing legal issues. In this excerpt from chapter 16, “Budgets and Budgeting,” learn how creating a budget can help control spending and keep your business out of the red.

You can purchase this book from the MOTHER EARTH NEWS store: Grow Your Handmade Business.

Money is such a deep and complicated subject. We could talk about it all day long and still not cover every aspect of it. Hopefully by now you have a clearer understanding about why your money is so very important. And because it is so important, let’s talk about something we all need, both personally and professionally, but is still a touchy subject: budgeting. Creating a budget can be easy and even fun — it’s actually sticking to the budget that can be a challenge.

First of All, What Exactly Is a Budget?

A budget is simply a guideline for the money you want to spend to make something happen. That something can be a new line of evening handbags or a new service you want to sell to clients or even any old project, like redoing your workspace. To devise a budget, you can either start with how much money you have to invest in the project at hand, or you can make a wish list of what you would ideally like for your project, and then see if that fits in with the monies you have available. Make sense? Good. So let’s talk about some specific budgets you’ll need to create and possibly include in your business plan.

Creating a Budget: Start-Up Budget

Let’s face it, starting a business takes money, and when you’re spending lots of money, it’s very easy to go overboard. That’s why having a start-up budget is essential. Before you spend a dime, make a list of what you absolutely need for your business and compare that with what money you have. Then, when you begin your buying spree, it will be easier to resist the temptation to buy a lot of extras that you may want but really don’t need. (See Image Gallery for a basic example of a start-up budget.)

First, we enter the amount of money we’re starting off with in the upper-right corner. For this example, we had $3,000. Then, as we plan our spending, enter the item, what it’s used for, and the cost. The next column is a running total of the amount we’re spending, which is a good thing to know. The amount-left column is a simple formula that subtracts the cost of each item from the total amount of money we have, then keeps on subtracting to create a running total of how much we have left.

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