Every business owner needs to draft an effective budget. However, the problem is that a lot of people exclude important expenses and, therefore, their budget ends up being inaccurate. Oversights of this nature can lead to financial headaches down the line because you may think that your business account has more money in it than it actually does. With that in mind, read on to discover more about some of the most common expenses that business owners leave out of their budgets so that you can make sure that you do not make the same mistake.

Why is a budget important?

Before we can take a look at the different expenses that you need to make sure you do not overlook when putting together a budget, we must establish why a budget is necessary to begin with. There are a number of different reasons why every business should have a budget. The first reason is that a budget gets everybody involved with your business on the same page. It also helps you to see the changes that you need to make ahead of time, as well as providing you with a measuring stick. Needless to say, an effective budget will also make sure that your business is not operating beyond its means.

Creating a business budget

Putting together a business budget does not need to be complicated. In fact, there are five simple steps that you can follow in order to put together an effective budget no matter what type of business you run. The first thing you need to do is tally all of your income sources. When you have done this, you should determine your fixed costs as well as your variable expenses. You then need to predict any one-time expenditures if possible. Once you have done this, you can put all of this together, and you will have your budget.

Expenses that you cannot overlook

The problem with most budgets today is that business owners neglect to include certain expenses and this results in their budget being inaccurate. To achieve success with your budget, you need to include every cost, no matter how big or small. With that in mind, we are going to take a look at some of the most common expenses that business owners overlook so that you can make sure you do not make the same mistake.

Office and equipment maintenance

While you will, no doubt, recognize that there is equipment your business requires in order to operate effectively and efficiently, you also need to account for the fact that repairs and replacements are going to be required along the way. This could be anything from needing to call in a plumber because of blocked pipes or requiring a computer repair service because one of your desktops isn’t functioning. No matter how well you maintain your equipment and your office space, there is going to come a time whereby equipment and utility facilities will fail. If you do not prepare for this when determining your one-time costs, you could leave yourself short in terms of having money available to fund these repairs. As you know, equipment has a habit of breaking at the most inconvenient times, and it does so often without any warning. This highlights even further why is essential to account for things like this in your budget.

Credit card and overdraft charges

Another expense that you need to account for is any charges you receive on your credit merchant accounts and your bank accounts. A lot of businesses use their overdraft, especially in the early years, as it helps to prevent issues with cash flow. Nevertheless, you need to account for the fact that there are going to be charges in place if you do use your overdraft, and therefore, this needs to be something that you include in your budget. In addition to this, the vast majority of companies around the world accept credit card payments today because this is something that consumers have come to expect. Nevertheless, you are going to get charged a percentage on every purchase that is made in this manner, and so you also need to include this in your budget so that you can have a realistic understanding of how much money you are actually making from every purchase.

Marketing

In addition to the points that have already been presented, putting together a stringent marketing budget is also important. You need to work out how much money you have available to dedicate to marketing and advertising. Once you have devised a budget, this will not only help you to market your business more efficiently and put together a solid plan, but it will be easier for you to budget because you will have a predetermined amount regarding how much you can spend on this element of your business every month.

Time

Time is one thing that cannot be included in your budget in terms of being a quantifiable amount of money. Nevertheless, it needs to be discussed in relation to your budget because time is arguably one of the most significant expenses that any business has. If you are not running your business efficiently, then you are going to be wasting time, and this is going to result in excess money being lost. This highlights why you have to work on implementing the most efficient time management processes as possible so that time is used effectively at your company and it is saving you money rather than costing you.

Hopefully, you now have a better understanding of why having a business budget is so critical, as well as the steps you should take to put together a budget. Make sure you do not forget the commonly overlooked expenses that have been discussed above, and you will give yourself a much better chance of achieving budget and business success.

 
*Article may contain affiliate links