Most mompreneurs don’t have much in the way of a budget. They’ll often times jot down some notes, or other times just keep it all in their heads. The problem with both actions is its easy to get carried away with spending, or worse, lose focus on the financial state of a business.
Have you had a chance to create a budget? I mean a real, actual budget on paper, not just a random idea in your head about what you’d like to earn and spend. If you don’t have a budget, it’s time to create one. You can use an online budget software, like Quickbooks, but, unless you have a million expenses and a variety of income streams, your budget can actually be quite simple and you can easily create a budget on your own. If you’re not sure where to get started, check out our Mompreneur’s Budget Printable. You can print 12 copies, one for each month, and place them in a notebook for your reference. Each page will allow you to budget for anticipated income and expenses, track actual income and expenses, and see a snapshot of your financial picture at the end of the month.
If you already have a budget, today I’d like you to revisit it to make sure it’s still relevant to your business today and make any adjustments if necessary.
When creating or adjusting your budget, keep all expenses in mind, including cost of goods, advertising, office supplies, etc. As far as amounts, only you know what you can afford and what you should budget each month for each particular item.
One question I get asked all the time is how to know how much to budget for income and expenses. This can be tricky, especially when you’re just starting out and aren’t sure how your products will sell. Here are a few tips to help you come up with your income estimate.
1. First, look at the maximum number of sales you can handle. If you’re making tutus or hair bows, think about how many you can feasibly produce on your own. If you’re a direct sales rep, think about how many parties you can do on your own and what the average attendance per party is. At this point, you’re not looking at dollar amounts, you’re looking at how many total sales you can possibly make.
2. From here, we’re going to head back down to reality and think about how much of that potential is actually attainable. Try to figure out how much demand actually exists for your product. This is where your market research comes in. If you’re a direct sales rep, consider contacting other reps in your company to see how many parties they do and what their average sales are. If you’re selling your own products, look at your target audience and see just how many people you can reach that would be interested in your services. For example, if you sell knitted hats for kids, you know your audience is mostly parents, so you’ll have to seek out parents in your area. Plus, you’ll know that you have a somewhat seasonal business, so you’ll receive more sales in the colder months than in the warmer months.
3. Your final step is to take the average price of your products and multiply it times the number of sales you can expect to receive. This will give you a great income estimate for your budget.
Another hot topic is how much to budget for advertising. Advertising is a crucial part of your business, and as such, it must be budgeted for appropriately. There are many recognized methods for budgeting advertising, but most are too complicated for mompreneurs. Instead of using those, here’s a simple formula for you. Take 5% of your anticipated monthly revenue and place it into your advertising budget. So, if you plan to make $1,000 in sales, your advertising budget for that month will be $50.
As you move forward with your budget, keep in mind that you can make adjustments to it as needed. It’s important to revisit it frequently to make sure you’re staying on top of your finances and growing a successful, profitable business.
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