Planning Weeks 9-10

Estimate Your Business Expenses

You must know how much it costs you to run your business to know if you are really profitable

In this decision you examine the foundation of building a profitable company – understanding all of the costs you incur to run and grow your company.

Without a careful and honest examination of your business’s expected costs you will not accurately set your pricing or fees and you will unnecessarily limit the profits you can gain from your imaginative marketing plan.

How To Do It

1. How do you find your costs?

You should know some of them from your past experience.

And you can research them online by finding a similar business.

2. Open an Excel spreadsheet which you have saved on your computer as “Business Expenses”

Start by creating twelve columns, with the months of the year as the titles.

In a series of separate rows in the spreadsheet, type in the title of one business expense category per row.

You will most likely end up with ten or so different expense categories.

For each expense item, type in a dollar amount you estimate you will need to spend for each month of the year.

Chances are good that most of your estimated business expenses will be the same dollar amount for each month. But, some expenses you may only pay quarterly or even annually so that dollar amounts for them won’t show up every month on your spreadsheet.

When you have filled in all expense items for all months, print out the spreadsheet and keep it someplace where you can easily review it, at least once per month.

Note on Use of QuickBooks

A bit further into this Planning Week we will talk about using QuickBooks accounting software to organize your financial records. To make proper use of the software, you need to enter the dollar amounts for all bills you pay, all company expenses you pay via a credit card and all monies deposited into your business checking account.

If you do this, then you can easily print out a variety of financial reports. The Profit & Loss Statement will show all of your expenses paid during the previous month. You can compare these numbers with the projected dollar amounts you entered into your expenses spreadsheet.

Great Online Resource
Intuit.com
“Common Start-up Costs for Small Businesses”
Click here to access the article.