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Home Business Tips – Budgeting

Resources are finite, and that includes money. So when you’re running a home based business, unless you’ve got a rich uncle who can lend you a few bucks, setting a budget for yourself must be one of your top priorities. In college, I learned all about budgeting and it helped me immensely with my home business. I’m not going to try to give you a full blown course in the subject because we’d be here for a week, but I will give you some simple tips on how to make that budget.


First thing you have to do is actually take stock of your resources. And don’t claim you have more than you actually have because unless you’ve figured out a way to convert water into wine, you’re not going to be able to keep your web hosting up and running by begging and pleading with your hosting company. So make these figures real. For the sake of this article, let’s say we have $100 a month available for our business.


Okay, next thing we have to do is break our expenses down into three categories. These are fixed, variable and optional. Fixed expenses are expenses that we absolutely can’t avoid, such as our Internet connection. If we can’t get online, we can’t do business. Variable expenses are those that we also have to have but change from month to month depending on what we’re doing. Advertising expenses are variable expenses. Finally, we have optional expenses. These are expenses that we can probably do without but would like to add to our budget if we can. An example of this might be a subscription to a magazine that we want in order to keep up with the industry.


After we’ve done that, we add up our fixed expenses. These are unavoidable and don’t change. After we’ve added these up, what’s left is what we have to work with between our variable and optional expenses. Let’s say our fixed expenses are just two things…our Internet connection and our web hosting in order to keep our site up. Without it, we’re out of business. Let’s say our Internet connection costs $25 a month and our hosting costs $5 a month. That’s $30 in fixed expenses. That leaves us $70 for variable and optional expenses.


We then look at our variable expenses and get a rough idea of what the average expenses are each month. Let’s say that for our advertising, which is our only variable expense, we hit a high of $55 a month during our busy times and only $35 a month during the summer. Taking the average, we’re around $45 a month. That will be our budget for our variable expenses. Add that to our fixed expenses and we’re at $75 a month. That leaves us $25 a month for optional expenses. We could use this for anything we like.

I purposely used small numbers for this example to keep this simple. In reality, at least for most home businesses, the numbers are much more complex. But the principle is the same. You take your fixed expenses, add them up, and that tells you what you have left for variable and optional expenses.

Hope this helps with making YOUR budget.







To Your Success,

Leon Edward

blog owner and webmaster of  http://www.HomeBusinessIT.com






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