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Budgeting for Your New Business

As a small business owner, one of the tasks that I labor over is my budget. Whether you are cash heavy or operating from one customer payment to another, budgeting is a very important factor in keeping your finances in order. The biggest challenge for a new business is calculating how much cash inflow to account for; the outflow is the easy part.

A good starting point is to add up all the recurring monthly customer payments (the ones you pretty much know you will get, don’t include customers who are slow to pay). Then average the inflows from your past several months and subtract out the recurring payments. Then add that difference to the recurring monthly payments and you will have a conservative start for cash inflow for your budget. This step is necessary, as your recurring payments have likely changed (hopefully for the better) over the past several months. Don’t fret, you won’t appear to have much for spending at first, but as you are able to roll over excess cash to the next months and as your business grows, so will your cash flow. Just remember to stick to your budget!

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