Budgeting for your Creative Business

Did you know that your business needs a budget? Yes, just like you need a budget for your personal finances you need one for your business. Managing money is essential if you want to succeed in your business. Part of being successful at this is having a monthly budget.

Yes, I know you're a creative and this is overwhelming. But stay with me. I'll make this quick and painless. 
 
​The goal of a budget is to make the most of the resources you have in order to reach your business goals (and probably some personal ones too!). A budget is simply telling your money where to go instead of wondering where it went. 

Here are three steps to start your business budget:

1. Determine your revenue (income before expenses). It is important to do this first because you cannot spend money without first knowing how much money you have to spend. It might help you to be specific in this area so you can see the services (or products) that bring in the income. For example, if you are a website designer you can list specific revenue sources, such as website templates and custom work. For photographers, you may you can use categories like wedding photography, portrait photography, and print sales.
2. Write down your fixed expenses. Certain expenses are always the same no matter how many clients you serve. Write these predictable expenses first as they are the easiest to figure out. Examples: Internet, website hosting, cell phone, business insurance, bookkeeping, accounting.
3. Calculate your variable expenses. These will be harder to figure out because they fluctuate month-to-month and depend on the number of clients you serve. The key here is to make an educated guess and adjust later as necessary. Examples: stock photography, office supplies, advertising, continuing eduction, travel.

Now set up your budget like this:

Revenue
Wedding Photography        $ 5,000
Print Sales                                 500
Total Revenue                     $ 5,500 

Expenses   
Office Supplies                     $    100
Utilities/Telephone                    200
Training/Education                     50
Advertising                                100
Travel                                        250
Insurance                                     50
Total Expenses                     $    750

Total Revenue                       $5,500
Less Total Expenses                  (750)
= Gross Profit                         $4,750

Less Taxes (15% x $4,750)†      (713)
= Net Profit                            $4,037

†Note: The 15% for taxes is an estimate. Consult
with a CPA to customize it to your business.

Remember when you first start your business you will not be able to create a perfect budget. Budgets develop over time. Make an educated guess at the beginning and adjust it every month until you have something that works for you.