Hey there, friend! Budgeting for an online business can seem like a daunting task, but not today. Whether you’re a newbie or a seasoned entrepreneur, you’re about to discover an uncomplicated, no-fuss method to budget for your business.
If we aren’t besties (yet!), I’m Madison from Madison Dearly Bookkeeping. Think of me as your financial mentor, or a bookkeeping big sis, if you will. Our goal is to make your financial journey smooth and hassle-free.
Before we start, you need one of these essentials:
1. Google Sheets: A simple spreadsheet tool if you want to drum up your own budget from scratch!
2. Pen and Paper: For those who love the old-school way. No shade – you do you!
3. Madison’s Budget Template: A ready-made template designed to save you time and simplify the process. Click here to download it!
Alright, let’s get started!
While you might be eager to figure out how much you can bring home, believe me, this is where we begin. Here are some expenses to consider:
Dive deep and think about your business’s unique expense categories. Once you have a 12-month projection, you’re all set for the next step.
Now let’s back into your revenue. Taking all of your expenses into account, what does it take to simply break even?
Let’s say you have $100K in expenses for all 12 months of the year. Then to just break even, you would need to bring in $100K in revenue.
Buuuuut, that’s not quite everything, right? Because we need to account for paying Y-O-U and saving for taxes.
This is the fun part. Add a formula to your spreadsheet that calculates 25% of your annual profit. This represents your tax savings. (But really 25% is just a guideline. Work with a CPA to determine how much you should be saving for taxes, based on a holistic picture of your life – not just your business!)
Your take-home pay? It’s the profit after deducting tax savings.
Remember, these are all just estimates! Your CPA might have you saving more for taxes, and you might have expenses throughout the year that pop up that you weren’t expecting. OR best case scenario… you make way more revenue than you were expecting!
Your job now is to play with those sales numbers until you get to a place where your sales are covering all expenses, saving for taxes and paying yourself what you need to bring home in order to support your bills at home.
Bonus points for splitting up your sales goals by revenue stream! For example, what portion of your sales goals is Brand Design, what portion is Brand + Web, and what portion is from your VIP Days? Break it out even further by determining how many projects at each price point you need to take on to hit your sales goals.
Let’s end with this – what do I need to bring home? Do I run this business to make extra payments on our personal debt? Do I bring home enough to save for our annual family vacation? Am I the only one who works in our family and I need to make enough to pay every single bill?
Once that number is determined, and you’ve got your sales goals and you’ve got yourself a budget, my friend.
Budgeting is literally one of my favorite things that I get to do with business owners. If this guide left you wanting more, I’ve got something extra for you.
Join me in a FREE masterclass where I craft an entire budget for an online entrepreneur aiming for a $120K take-home pay. (I’ll play around with some other scenarios for lower take-home pay and more or less outsourcing expenses!) It’s a front-row seat to the full budgeting process from beginning to end, the whole shebang!
I hope this guide has empowered you to finally create a budget for your business! Remember, with the right tools and approach, budgeting can be as easy as pie. (And dare I say, fun?!)
See you soon, and happy budgeting!