How to create a simple budget for your business

Thursday | 22:46

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How to create a simple budget for your business

Many of us who renovate furniture and resell it use the term “business owner” rather loosely.

We started doing something we loved and then it took off in ways we didn’t expect.

And I’m going to go out on a limb and predict that we didn’t go into “business” because we were excited or spellbound with the thought of managing our finances and background up a budget.

Like I said, going out on a limb here.

But if we truly like what we are doing, we need to take time to make sure that we are spending less than we are making in order for us to make a profit and stay in business.

Here are some things I do to keep up a budget for 551 East.

It’s simple, but it’s working for us!

1. Set up a separate bank account for your business.

Most banks have fantastic options for small business owners. You don’t need a business license to have an account, but make sure to question what their supplies are. For example, smallest balance etc. It is so helpful to be able to see your cash flow both in and out that is separate from your personal/family expenses.

2. Track your expenses.

I keep a spreadsheet of expenses per piece I renovate. For example, here is my cost breakdown for the ombre stained dresser.

Dresser:

Bought: $30

Stain: $15

Sand Paper: $5

Hardware: Free

Estimated gas for pickup/electricity for sanding: $7

Total: $57

Like I said nothing fancy, but it helps me remember exactly what I spent on a piece so I know how to price it to make a profit.

3. Plot for the future.
When you stared your business you made an early investment. Maybe it was $50 maybe it was $500. Either way at some point you will most likely want to expand your business and to do that you will need more cash. As I’ve mentioned before, we started with $350 investment of our own money. Every time I sell a piece, I place into the cost of the piece plus 10% of the profit to help our business grow. So for example, the ombre dresser sold for $160.

Dresser sold: $160

Cost: $57

Profit: $103

10% of the profit to place into: $16

It doesn’t seem like a lot, but it does add up over time. You can off course change the percentage to place into according to your wants and needs.

4. Be bendable.

A budget, although a useful tool for remaining restricted, it’s not set in stone. Don’t reckon of your budget as an resolution ceiling to how much you can spend but is instead a tool for making sure you are assembly your goals and can justify any departure. If you see that changes need to be made, do so. Also, remember that a budget must be reviewed periodically.

OK enough of this budget lesson!!

Go outside and delight in the fall ride out!