Budgeting Tips for Entrepreneurs

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One of the biggest challenges faced by small business owners is managing cash flow. Taking time to learn to budget can help you over this hurdle and propel your business toward fiscal success.


If you are leaving a full-time job with a secure income to pursue your dream of entrepreneurship, understand income may be sporadic. This can create a personal budget challenge and is one of the risks of striking out on your own. We offer these budgeting tips to small business owners in Arizona.


  1. Know Your Expenses, Don’t Guess: Expenses include start-up costs and taxes, rent, wages and payroll, mortgage payments on the business property, utilities, supplies, marketing and Internet. Also track legal or accounting obligations.  Start-up costs include registering the business name, setting up the business entity, graphic design and marketing. Even a home-based business has start-up costs and ongoing expenses.  
  2. Create cash flow projections: Initially it is best to underestimate potential business earnings.  While this can be difficult because you do not know what sales will be, it is an important step in the process.  Don’t assume initial sales will meet your targets. 
  3. Understand discretionary business expenses as simple as offering free coffee to employees or customers and how many pens and pencils you will purchase in an order. What are other supplies, decorations, furniture and accessories are needed?  Do you buy a copy machine or rent? Do you hire an office manager or wait?  Know your wants vs. needs until the cash starts flowing in.
  4. Don’t spend all of your profits: Set up a savings account as a contingency fund. Make certain your budget leaves you with more money in that account than you’re spending. Pay yourself a flat wage and save the rest.  Stay on budget and fight the urge to spend when business is booming.  This will save you (pun intended) when business is slower than anticipated.
  5. Pay down debt quickly: It’s inevitable that you will incur debt when you’re starting your business. Reducing debt quickly means avoiding interest charges.  Get the business out of the red and operating in the black as quickly as possible is one of the smartest business move you can make. If you do take out loans to start your business, make certain you have budgeted for the repayment every month.


Write your business budget down whether with pencil and paper or a computer program such as Quickbooks. It should be a living document that is referred to when payments come in and monthly bills are written. The definition of business success is one in which the entrepreneur profits and the personal income for the business owner grows monthly.

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