How to prepare a small business financial budget?

Financial planning/budgeting

 

Financial planning/budgeting is the process of individual or company financial goals by managing income and expenses in a planned and systematic manner.

In a small company, a financial budget means

1. The process of developing a comprehensive financial plan to achieve business goals. Such as increasing profitability, expanding markets, or paying off debt.
2. Determining the maximum allocation of financial resources in various business activities, such as production, marketing, and business development.
3. Periodic financial control to ensure business activities run in accordance with the plans and budgets that have been set.

Benefits of financial budgeting for small businesses.

1. Increase the efficiency and effectiveness of the use of financial resources.
2. Helps the company achieve its financial goals.
3. Improves financial control and accountability.
4. Helps in making more informed financial decisions.
5. Helps in dealing with unexpected financial situations.

Factors affecting small business budget planning.

1. Vision, mission and goals of the company.
2. Current financial condition of the company.
3. Market and competitive conditions.
4. Financial capability of the company.
5. Availability of financial resources.
6. Government policy.

Examples of financial planning for small businesses

1. Prepare an income and expenditure budget, containing estimates of income and expenditure for a certain period.
2. Develop a cash flow plan. The cash flow plan shows the movement of cash in and cash out over a certain period.
3. Develop a financial ratio analysis. Financial ratio analysis is used to determine the overall financial condition.
4. Develop an investment plan. An investment plan is a plan to buy new assets or expand the business.

How to develop a financial plan for small businesses

1. Involve all interested parties in budget planning.
2. Use accurate data and information.
3. Set SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) financial goals.
4. Monitor and evaluate financial planning regularly.

Simple Example

 

A person sets up a small cafe business. The plan includes estimated start-up costs, projected income and expenses.
The cafe will serve coffee, tea and snacks with a modern concept. The cafe will be located in an area near campus or offices.

Initial Cost

NO	ITEM	COST
1	Space rental (3 months)	15.000.000
2	Renovation and decoration	10.000.000
3	Equipment and supplies	20.000.000
4	Raw material inventory (initial)	5.000.000
5	Business licenses and others	2.000.000
6	Total	52.000.000

Income and Expenditure Projections

Item	Bulan 1	Bulan 2	Bulan 3
Revenue	50.000.000	60.000.000	70.000.000
Coffee sales	30.000.000	36.000.000	42.000.000
Snack sales	20.000.000	24.000.000	30.000.000
Expenses	40.000.000	40.000.000	41.000.000