Having a business budget is essential for keeping keep track of income, expenses, meeting financial goals, planning start-up expenses or calculating how to finance an expansion of your creative practice.
Budgets help improve cash flow and cut back on less-critical expenditures. You can create a monthly, quarterly or yearly budget, but a monthly budget will help you gain a better perspective of your business’ changing the financial picture.
Decide how to create an art/design business budget Whether it’s a paint brush and art paper, a budget spreadsheet, or accounting software, such as Quickbooks or MYOB, you need to get grips with the budget culture.
Monthly, quarterly or annual budget?
Either are good, but a monthly budget allows you to see how your predictions compare with your actual income and expenditures.
Include fixed expenses
Your fixed expenses should consist of costs that will not change, such as your studio rental, bills for commercial space or mortgage and loan payments.
Add in variable expenses
These cover costs that change monthly, such as utility bills and consumable supply costs. You can settle on an average of these expenses over the last six months or year.
Forecast your earnings
Put this figure in the income section, but leave the actual income space blank until the end of the month, quarter or year.
Analyze your budget regularly
Regularly review whether your projected expenditures and income are in line with the amounts you earnt and received. You can do this by subtracting the actual expenses and income from the budget figures or vice versa. Start with the higher number. For example, if your actual expenses were more than the budget expenses, subtract the budget expenses from the actual figures to see the difference.
Tips
If you are creating a business start-up budget, you won’t have previous expenses to create a budget. So research the costs of the expenses you need to include and use estimates in your budget rather than averages. Then review your budget periodically so you can make
changes to improve your business cash flow.
Want to learn more?
- Just starting out? CLICK HERE
- Been working in your business for two years or more? CLICK HERE
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To your success,
Vinh Van Lam & Stuart Horrex
Your Coaches ArtSHINE industries
