A business budget for construction company |ProConstruction Guide
A business budget for your construction company

A business budget for your construction company

Business budget 2

To create a simple business budget, it doesn’t matter if you use a pencil and paper or a computer spreadsheet. The important thing is that it includes all the financial elements related to your business.

A business budget is one of the most important tools available for small construction business owners and entrepreneurs. Without it, you could potentially spend more money than your construction business makes or, conversely, you might not spend enough money to grow and compete.

To create a simple business budget for your construction company, it doesn’t matter if you use a pencil and paper or a computer spreadsheet. The important thing is that it includes all the financial elements related to your business and that you monitor and adjust it to so that it always reflects your company’s performance. A monthly budget is recommended by most experts. Follow the step by step instructions here to create a business budget for your construcion company.

When creating your business budget, estimate income and expenses conservatively. If you’re starting a business, overestimate expenses and underestimate revenue. Your budget should help restrain you from unnecessary purchases, but if a valuable opportunity presents itself, don’t be afraid to stretch the budget to accommodate the purchase. Leave open lines in your budget sheet for unanticipated expenses, so you can always adjust it accordingly.

A business budget may seem like a boring, time-consuming task, but over time you’ll realize that this simple tool can help eliminate the guesswork in running a construction business and help you manage your business more efficiently.

Business Budget

9 steps to a simple business budget

  1. For your business budget, start by making a four-column chart and title the columns or download and print the free budget form here: Categories, Budget Amounts, Actual Amounts and Difference. Divide column one into four sections: Income, Fixed Expenses, Flexible Expenses and Emergency Fund.
  2. Under “Income” list all income types for your business, such as sales, interest, job payments, etc. Label the last line “Total Income.”
  3. Under “Fixed Expenses” list your company’s fixed expenses. Include rent, office furniture, salaries, vehicle payments, health insurance, etc.
  4. Under “Flexible Business Expenses” list expenses that vary from month to month, including telephone, utilities, fuel, materials, etc.
  5. Under “Emergency Cash Fund” enter a percentage of your monthly revenue that you will set aside each month to cover unexpected expenses. It may be difficult to reserve the funds, but if a large unexpected cost occurs, you’ll be glad you have it.
  6. Label the last line under the Expenses and the Emergency Cash Fund “Total Expenses.”
  7. In the second column, enter your projected income and expense estimates for each category. Resist the temptation to repeat the amounts for each month. If your income and/or expenses vary month to month or seasonally, adjust the projected income and expenses accordingly.
  8. Total your actual income and expenses for each category at the end of each month and enter them in column three.
  9. Enter the difference between your budgeted and actual amounts in column four. Analyze the results each month and adjust the following month’s budgets to reflect your business performance and create a more accurate budget.

–By Gabriel Ascencio

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