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James Clausen

Step by step instructions on how to create a budget. Business budgeting is important for maximizing profits and giving the company financial direction.

The first step to creating a budget is the creation of the sales forecast.
The forecast is an estimate of future sales and other types of income. Although the budget is not a prediction of the future, it uses future estimated income as a means of dispersing expenditures.
Budgeting financial expenditures allows the business to maximize profitability by controlling expenses.

Financial Planning

What is a Small Business Budget?
The budget is basically a tool that allocates expenses overtime. It acts like an alarm to alert the entrepreneur if expenses are exceeding their limits.
There are generally two categories of expenses, fixed and operating expenses.
When creating a budget, there is usually more emphasis put on operating expenses, because they tend to fluctuate with operating activities.

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Fixed Expenses and Small Business Budgeting
Fixed expenses generally don’t fluctuate overtime.
Since they remain somewhat constant, incorporating them into the budget is relatively easy.
Often times fixed expenses may not even be incorporated into the budget since they don’t fluctuate with operating activities. Some examples of fixed expenses are:
1.Rent
2.Utilities
3.Insurance
4.Salaries

Financial Planning

Operating Expenses and Small Business Budgeting
Operating expenses, sometimes known as variable expenses, usually fluctuate with operating activities.
In a manufacturing environment, they tend to increase as production increases.
In a business sales environment they tend to increase as sales activities increase.
Operating expenditures are usually the main types of expenses that are incorporated into a budget because they have better probability of increasing if not controlled. Some examples of operating expenses are:
1.Sales Commission
2.Hourly Wages
3.Supplies
4.Freight
5.Equipment Maintenance
6.Advertising

Creating a Budget - The Income Statement and Forecast
Besides the forecast, the other analytical tool that’s used to create the budget is the income statement.
Since operating expenses play a more important role in small business budgeting, let’s look at creating a budget using operating expenses.
The following are the steps for creating a budget.

[Gill]

Please, give me this case

[SERGIO]

Money - is root of all evil!!