How do I know if my business is making money?

When we discuss with clients about their new businesses, the most frequent questions asked are:

“How do I know if my business is making money?”

By creating a budget for your business.

“But this is my very first time and how do I create one if I don’t have any figures to work on?”

Before we answer the above questions, let’s talk about what is a budget?

A budget simply predicts your income and expense for your business in a given period. It is just a guide so you know how your business will be tracking …actual versus estimate.

As with any estimation, your actual reality may vary too. So a budget is not something set in concrete either. However, it is a set of figures you do need to review throughout the year, making adjustments as you get the actual figures.

The best way to start filling out a budget is to begin with figures you do know such as fixed expenses or recurring costs like your monthly phone bill or rent. You should also take equipment purchases into consideration and divide their cost over their lifetime. For example if you plan to buy a computer for your business, divide its cost by 3.5 years. Your accountant will be the right person to assist you with this situation.

It is also important to make revenue projections so you can plan for income peaks and low seasons. But it can be quite difficult to project revenue when you don’t have previous sales figures to base on.

If you are a new starter, for your first year of trading you will have to set your sales figures per week or month based on your expectations of your marketing, promotion, advertising, trade shows and markets activities you have scheduled for the year.

Always select numbers that are realistic, achievable and desirable so you have a real purpose to reach it. Your income does not have to be in tens or hundreds of thousands of dollars for your business to make money.  Remember success comes in many different ways and sizes. So it’s important to set your sales & incomes goals. Have a figure in mind what will make you happy, feeling good and successful. It’s up to you to determine what success really means to you.

So have you created a Budget for your business yet? If you haven’t done one, it’s not too late.

Do it now and take control of your Art and Designs business.

Just remember this…

Prepare Well + Plan Well + Execute Well = Business Success