Writing and sticking to a budget is paramount to success for your children’s activity or education company. Budgets help keep you on track with your business goals and objectives so that you can ensure you are doing what you need to not only maintain your day-to-day operations, but also scale and grow.
When you have accurate reporting of your income and expenses, budgeting is a lot easier. Tools like Sawyer are built to help small businesses make smart decisions with real-time reporting and dashboards. Sawyer is specifically designed for children’s activity and education businesses.
In this article, we will outline everything you need to know to create a budget for your small business, including what to include in your budget and how to plan your budget and monthly expenses. We’ve also included a small business budget template so you can create a budget with all of the right pieces.
- How to write a budget
- ~What to include in a budget? List of monthly expenses for a small business
- ~What is the last step in planning your budget?
- Marketing budget for small business
- Small business budget template
How to write a budget
There are a few monthly expenses that you need to include when you write a budget for your small business. Without these elements, your budget won’t do its job of helping you know what the right financial decisions are for your business. Likewise, a good budget shows you where you need to cut spending in order to survive and thrive.
If you are working on a budget before you start your business, then use estimates for these elements. Do as much research as you can and then try to be conservative in your estimates so that your budget is realistic. If your business is currently in operation use historical data from the previous calendar year.
What to include in a budget? List of monthly expenses for a small business
1. Your income sources
Before you can do anything else, you need to know how much money you are planning to bring in (projected income) or currently bringing in (income). Make sure you take into account all of your revenue sources. For example, if you teach classes in-person and online, if you sell materials or kits for families, or if you provide private lessons or birthday parties. If you tend to see seasonal trends in sales, make sure to take these into account for the respective months. Everything should be tallied in this section.
2. Fixed costs
Once you know how much is coming in, you can begin to determine how much is going out. Because fixed costs stay the same each month, they are a good place to start. Examples of fixed costs are rent, insurance, utilities for your business like Internet, employee salaries, and platform subscriptions.
3. Variable costs
As the name implies, variable costs vary from month to month. This makes them slightly trickier to budget, but they are super important to measure because on strong months, you can spend more on them and in lighter months, you likely need to cut back. Variable costs can be commission on item sales, consumption-based utilities like gas and electricity, travel, holiday gifts for employees, or shipping costs. Even though they are different each month, keeping good track of these variable costs will help you determine their seasonal averages, so you can keep that in mind as you budget.
4. One-time costs
If you have any planned one-time costs, like buying a new computer and microphone for better online classes, then you can include that in this section. However, for the most part, this section acts as a buffer to protect your business from large, unexpected costs. This helps keep you prepared for broken equipment, damage to your studio, slow months because of a global pandemic, or something similar.
What is the last step in planning your budget?
Once you have all of the above elements organized, it is time to put them all together to actually create your budget. After you have added up your monthly income, then add up your monthly expenses so that you can compare the two numbers.
Ideally, you have more money coming in (income) than you do going out (expenses). The difference between these numbers is your profit. Once you have that number, then you can make business decisions based on how your business is financially performing. For example, if you do the math and realize that your expenses are greater than your income and you are actually not making a profit, you will need to go back to your budget and reduce spending. In this case, you should also work on increasing enrollment so you can increase your income. As you set business goals for the new year, think about your budget so you can stay on track.
Marketing budget for small business
You might have noticed in the above example that we did not include marketing costs. For most children’s activity and education businesses, marketing is not part of their initial budget because they want to get their business off the ground first.
When you are ready to add marketing to your small business budget, the US Small Business Administration (SBA) recommends that if your small business has a revenue of less than $5 million, and margins in the range of 10-12% (after covering other expenses), you should allocate 7-8% of your revenue to marketing. They say, “this budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.).”
Got room in your budget and looking for marketing ideas for your small business? Check out our guide.
Small business budget template
There are a lot of good budget templates that you can use to make creating and managing your budget even easier. Utilizing a template is helpful for starting your budget, keeping quick notes and staying up-to-date. Here are some options that can help you.
Google Sheets budget template
If you already use Google Sheets, then you are in luck with this free Google Sheets budget template. It is best for tracking your annual budget and the graphs and tables are helpful for visualizing how your company is doing.
Microsoft Office expenses template
For those who prefer Microsoft, you can consider using the free Microsoft Office expenses template. Note: this only tracks expenses, not income, but it does do a good job of showing the difference between estimated and actual expenses. Therefore, this could be a good tool for new business owners as you get the lay of the land.
Capterra small business budget template
Small businesses love this template created by Capterra because it utilizes Excel rather than a specific accounting software. There are detailed instructions to help you get set up. Plus, you can compare and contrast your numbers easily, so making decisions is a lot more simple. The best part? It’s free!
Creating and managing your small business budget does not need to be scary or difficult. With Sawyer, we offer daily, weekly, and annual revenue tracking, real-time reporting, enrollment dashboards, secure payment options, and so much more. Our team of experts work with small business owners every day to grow and scale so that they can continue changing lives. Interested in seeing how Sawyer can help your business? Get a free demo or start your free trial today!