A working business man should have a detailed business plan that can project expenses over a span of a few years. This plan can tell you how your business is doing currently and projections for how it will look in the future. Here’s some quick and easy tips on how an individual can evaluate one’s budget.
1. Calculate your income- Collect all information on your monthly income. Try to round numbers down and use worst-case scenarios.
2. Calculate your fixed costs- Put together all expected costs of each month. For example: Salaries, licensing fees, web hosting, fees etc. and all other current workspace expenses.
3. Calculate variable expenses- These types of expenses can vary each month due to several reasons. Items such as utility bills, Commissions, travel, material costs, equipment rental fees, marketing costs, etc. Have no fear, these sorts of expenses can scale up or down with sales. You can easily be making more money just by spending more money.
4. Predict big expenses- Predicting won’t always come easy, but is a vital part. Anything can happen at any time out of nowhere, but in regards to major expenses think about big purchases that will be made within a few years. Certain outcomes and occurrences are easier to predict whilst some are a bit harder.
5. Look at the big picture in your business- After gaining the knowledge of where everything is being placed and going. Begin calculating how much money is left after all your expenses/bills are paid. Based on this number you can predict how much money is able to be used for office space. As time goes on income will hopefully increase, leaving more revenue available, resulting in less of a percentage spent on office space and more towards other expenses.