Simply put, if you're starting a business, you either need a budget or very rich and forgiving parents. It's easy for unforeseen costs to mount up and exceed the money you have available, which is why it's important to plan things out with a budget. This simple startup business budget template offers you a starting point for estimating the startup costs and funding needed for your new business.
Because it's a template, you can of course adjust it for the needs of your particular business. It comes pre-populated with a list of basic expense categories that apply to many businesses, some of which are often overlooked. Use it to plan for your fixed and monthly expenses, in order to get an overview of how much funding you will require for your business to stay solvent in your first year.
90% of startups fail, the vast majority of them within their first five years. And sure, some of those are just poor ideas, like online coffin-shaped toilets for dogs. But even a good idea isn't enough if you haven't budgeted correctly and run out of money.
Startups rely heavily on developing an MVP, but not all founders realize that this stands for Minimum Viable Product. It is important not to financially ruin your business by expending your full budget on baseball's 7-time National League MVP Barry Bonds.
In 2018, 82% of businesses that failed did so due to cash flow problems. Why don't we have a more recent statistic for last year? It's possible the business that collected and shared that information also failed due to cash flow problems. Cash flow: It's a serious problem.
Take a wild guess: How much money will it take to start your small business?
Actually, don't just guess wildly, that seems like a bad idea. Most creditors and employees don't appreciate it when you simply guess how much you owe them and whether you might be able to pay. When it comes to your finances, carefully-considered budgets are much better than wild guesses. Use this business budget spreadsheet to calculate the startup costs for your business so you can request funding, attract investors, and estimate when you’ll turn a profit.
This budget template is composed of two main sections: Costs, and Funding.
The Costs section is broken down into fixed expenses and monthly expenses. The list of expected fixed expenses includes common things you'll need to launch your own startup business, ranging from advertising and franchise fees, to computer equipment and permits and licenses. Note that because this is just a simple template, you will need to make adjustments for your particular industry.
Monthly expenses like rent, utilities, and salaries, are all tallied in their own section, and then that subtotal is multiplied by the number of months you have selected. If you need your initial funding to last for longer than 6 months, be sure to change the default month multiplier number.
The Funding section is broken down into Investor Funding, Financer Funding, and Other. Your total funding is then compared to your total startup costs, so you can see a bottom line of whether your funding is enough to cover your expenses, or whether you're in the red.
Further explanation is available on the About worksheet.
Some people say that starting a business isn't easy. But they're wrong; starting a business is as easy as declaring that you've started a business.
Starting a successful business that doesn't immediately collapse and run out of money, however, is much harder.
You need to know your market, pick a good location if you're not fully remote, secure funding, build an effective team, and carefully budget to ensure that you can cover your costs long enough for your business to become profitable. You're on your own for researching your market and picking a location. But here’s an Applicant Tracking Template to help you build an effective team.
Now when it comes to building a budget, some items can be easily forgotten if they're not on your mind. That's why it's helpful to have a business start up costs spreadsheet like this one: to make sure you've got all your expenses, both fixed and monthly, accounted for. And to make sure that your funding can cover them.
Most businesses. Or at least, most businesses that succeed. If your business has startup costs, budgeting to ensure you can pay those costs is basic good business practice. If your business has no costs, then you don't need a budget, and can soon become the richest elf in fairyland.