Every second month Emma answers a finance question (via Vlog or Blog) asked by a member of Microsoft Bizspark or the startup community. This month, she answers the question of where to start when it comes to preparing a budget.
#Nudgemoments StartUp Question: I’m applying for R&D grants and investor funding and I’ve been asked to put together a budget. Where do I start?
At Nudge, we see a budget as “your startup story… in numbers”. A budget tells the story of your startup’s journey and uses numbers to do so. How has your startup performed to date? Are you at the stage where you’re making sales? What have your expenses been? What’s your growth been like? What does the future look like for your startup?
Whilst constructing a budget is generally a requirement for funding, when done properly it also helps you to make better business decisions. Knowing your numbers can help you visualise when you’ll be able to expand into new markets, understand your resourcing requirements and also stay accountable. Tracking your performance to budget also helps you understand where you are compared to your expectations. Also by comparing your actual performance to your budgeted performance, the variances can help you identify both problems and opportunities.
Before you even start preparing your budget, there are a few parts of your business story which you need to understand:
After considering these points, it’s time to start putting together your budget. These steps will help you get started:
Emma Petroulas is Client Happiness Director at Nudge Accounting. She also lectures in Small Business Accounting at the University of Technology, Sydney.
To have Emma answer your finance question next month, post a comment here or tweet using #Nudgemoments