Without a budget or a plan, a business runs the risk of spending more money than it is taking in, or conversely, not spending enough money to grow the business and compete.
For example, many business owners must make rent or mortgage payments.
The goal is to figure out what an average weekly expense for overhead, utilities, labor, raw materials, etc. Based on this information, you may then be able to estimate or forecast whether you'll have enough extra money to expand the business, or to tuck away some money into savings.
On the flip side, owners may realize that in order to have three employees instead of two, the business will have to generate more in revenue each week.
The goal is to make sure that enough money is available to keep the business up and running, to grow the business, to compete, and to ensure a solid emergency fund.
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They also have utility bills, payroll expenses, cost of goods sold expenses (raw materials), interest and tax payments.
The point is every business owner should consider these items and any other costs specifically associated with the business when setting up shop or taking over an existing business.
Because of this, it's wise to factor in some slack and make sure that you have more than enough money socked away (or coming in) before expanding the business or taking on new employees.
If times are tight and money must be found somewhere in order to pay a crucial bill, advertise, or otherwise capitalize on an opportunity, consider cost cutting.