Creating a budget for your Internet marketing company is easier than you think. For the manager who is not numerically inclined a budget may seem daunting. However, with a just a few simple steps you can have your Internet marketing company financially organized so you can spend more time doing what you enjoy; helping others improve their online presence.
“A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” William Feather, Noted American Publisher & Author
A budget may be the most important tool you use in daily operation of your Internet marketing company. But before you can even create a budget it’s important to understand a few terms:
- A budget is plan that tells your money where it should go sometime in the future. Each month I plan on paying employee wages so I estimate how much it will cost.
- Accounting is the practice of recording and reporting historical financial information. To create a budget managers use accounting data as a historical record of what happened.
- A forecast is a prediction of what you think will happen. Normally, a forecast is designed to estimate revenue.
- All three of these terms are the foundation of a solid financial plan. A financial plan should encompass all aspects of an Internet marketing company’s financial history and outlook.
Understanding the differences and value of each of these terms you can now begin the process of creating a budget. Here are the steps you should take writing your budget:
1) Organize Accounting Data – If you manage an Internet marketing company you probably have some sort of way to track your expenses. I recommend accounting software like Quickbooks or Microsoft Money. However, until you have a few client and employees Microsoft Excel or Apple Numbers will work just fine. As you incur each expense you should categorize each part of the transaction.
2) Prioritize Expenses – Create a list of all your expenses from priority A to Z. Internet marketing is a service industry so labor will most likely be your most important expense. In addition to wages there are payroll taxes, insurances, and other costs per employee. Here are some other major expenses that you should consider: rent, utilities, telephone/internet, travel, and advertising.
3) Estimate Costs. Next to each expense estimate the monthly cost. This is probably the easiest part of a budget because there are no wrong answers. For example, if you want to spend money on Google AdWords then put down the exact dollar amount. It’s easy to get caught up trying to be exact but a budget is only a guide based on your best guess.
4) Estimate Sources of Money. Revenue is always difficult to estimate. However, you probably have either money in the bank and access to some form of credit. Total all available monies and using your list of prioritzed expenses estimate if you have enough money coming in as you have going out. If you have more money coming in congratulation you may make a profit and skip to step 6. On the other hand, if you plan on spending more than you have see the next step.
5) Create an Unfunded List. On your prioritized list of expenses you should have a running total. Draw a line where your running total exceeds your total source of monies. Anything below this line is unfunded so don’t plan on doing it.
6) Spend Your Budget. This is probably the hardest part about a budget but you should do everything within your power to spend your money according to the budget. The problem with most managers is that they create a budget and day one they throw it out. After the month is over you can then go back and see how well you managed based upon the budget.
Obviously, this sample budget is very simplistic. Your Internet marketing company budget will have many more expenses with dates the money will get spent. Just remember that your budget will only be valuable if you use it.