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Is it important to prepare a budget for my new micro-business? How do I create one?

Oct 14, 2009
Preparing a budget, particularly when starting a new business, isn't just a good idea; it is vital to your success.

Start by purchasing a small-business accounting software package.  Use the chart of accounts provided by the software to see the types of expenses you can expect your business to incur. 

You'll see expenses such as rent, utilities, insurance, taxes, and dozens of other items.  Based on your anticipated expenses, plug in dollar amounts for the fixed costs you expect during the next 12 months. 

Next, identify customers and related sales volumes.  Try to project your revenues for the next 12 months.  This is not the time to put your dreams on paper.  Be as realistic as you can about your anticipated revenues. 

Some expenses, such as employee costs, shipping and raw materials, will vary based on your sales and revenue projections.  Try to estimate these varying expenses in your budget as best you can.

Preparing a budget for a new business is largely guesswork.  But within a short time, you'll have enough financial information to change from guesswork to realistic estimates. 

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