by B. Lee

Created on: May 12, 2008

Money management and your home based business is very important.
You surely must understand the financial makeup of your
home based or small business venture to achieve profits. And now is the
perfect time to learn to budget for your small/home business.
Once again budgeting is a vital part of money management in your business
if you wish to profit. Let's take a look at a way to start a simple easy to follow

budgeting process.

Examine all your income, your financial statements, review
them carefully. Now, determine your income for the month.

Tally up these figures carefully. Put the sum in the plus column.
Now add in any other income connected with the business for the
month. Remember, you do not want expenses to exceed your
monthly income. You wan to see plus figures remaining at
the end of each month to save or invest back into your business.

Now list all the expected fixed expenses for the month. These are
the expenses you regularly pay each and every month. These are
not the luxuries or impulse items you might buy like an expensive
office chair with back massager or 14kt gold mouse. Fixed income expenditures
might include your taxes, mortgages, insurance, payroll, car lease,
furniture lease, equipment lease, advertising, marketing, supplies.

Now tally up your expenses. Place expenses in categories. Such as debts,
payroll, overhead, advertising, marketing, equipment. Look for spending patterns.
Where are the majority of expenses? Are most to payroll, supplies, overhead.
Are the expenses less or more than your monthly income? This will help you
determine where your financial problem is and guide you in taking steps to
remedy the problem.

For example, if your monthly business income is $5,000 and your total expenditures
are $6,000 you know a financial problem exist. A problem that
needs immediate action to be solved before you get deeply in debt.
You will not be able to profit, invest, or save until this
money management problem is solved.

When budgeting to save or invest back into your business remember you don't
always have to cut out an expenditure all together. Maybe trimming back will
be the cure to your financial woes. Instead of hiring two full time staff members. Cut back
to one part time helper. Or instead of purchasing the most expensive supplies check out your local discount office supply stores. Is your advertising budget over the top? Perhaps
you are spending too much. For example spending $500 on advertising might be too much for your home business budget. Find free ways like word of mouth, or recommendations to advertise. Or place small ads in local free publications instead of paying ads in
newspapers or magazines.

Use your findings to predict expenditures throughout the
year, monthly, or weekly. Depending on the type of business
you operate. Review and adjust the numbers throughout the
year.

Learn to stick to your budget in order to manage your money wisely.
And don't be afraid to seek professional help from accountants or other financial
advisers. Also check out the Small Business Administration
website ( www.sba.gov.com) for more free information on planning
a budget or managing your money for your home or small based business.

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