While small business owners can create eye-popping marketing schemes, innovative products and services, and an interactive website that brings in droves of visitors per day, these aspects of a business are merely pieces of a larger puzzle. Fitting this puzzle together requires that the company have a solid strategic financial plan, starting with a budget.

"Having a budget stacks the odds in your favor dramatically," Vicki Suiter, a business consultant with Suiter Financial System, told Inc. magazine. "It helps you make happen what you want to have happen."

The entrepreneurial budget

Creating an annual budget is challenging enough for businesses that have been around for years, which means entrepreneurs face an even bigger challenge while financial forecasting a whole year of results. While these startups don't have extensive financial histories with which to create a budgeting model, they do have a firm understanding of their business and marketplace, which is the essence of a logical financial plan. These entrepreneurs can take a look at similar businesses in their industry and see how they perform this crucial task. Noticing things like how much they charge for a certain item, what they are doing with marketing and how many employees they have can shed some light on line items and expenses entrepreneurs will need to keep in mind when they formulate their financial plan. 

Other costs entrepreneurs will have to plan for may be slightly easier to account for, such as rent, insurance, licensing fees, internet, etc. These fall under the fixed expense category, as they are recurring costs that are unlikely to fluctuate much in either direction. After having an idea of expenses, small business owners must be realistic with their projected revenue and maintain sufficient working capital in case problems arise.

"People assume they're going to be making a lot of money as soon as they open their doors," Emily Gasner, a business coach with Working Solutions, told the magazine. "It takes longer than they expect to get up and running, and it's more expensive than they expect." 

Leave room for change

After opening up their doors, small business owners must keep their budget handy and be willing to revise and improve it as necessary. Startups need to have the flexibility to downsize or make additions throughout the year, but in order to do that, they need to have crafted a realistic forward-thinking plan that accounts for the highs and lows that often come with a new venture. Whether they need to bring more staff, cut spending or increase their inventory, entrepreneurs will need a financial guide to help them make sure their decision-making is sound and in line with their resources.

Continuing to reference a budget is also important, because entrepreneurs need to check the correctness of financial results. Everyone makes mistakes, which is why it's important to constantly review your forward looking assumptions before an error causes your business to spiral out of control.

Get help

Many entrepreneurs may feel as though they can run their budgets by themselves, and this is where they will commonly run into trouble. There are a few ways these startup business owners can get the appropriate help they need to make sure they have sound budgeting practices. Bringing in an accountant can free up the business owner to focus more on improving their overall operations. Purchasing budgeting software can also help entrepreneurs with their finances because it can automate many processes, providing a quick and efficient way for small business owners to manage their resources.

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