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What are you gonna spend next year?
Hi this is Judi Otton with GrowthCast and today we’re continuing on with our series on budgeting. Last week we talked about what you’re going to make. This week, we’re going to talk about expenses, or what you’re going to spend, and I have 10 tips to give you.
First of all, I want you to review your current year’s expenses. It’s a great starting place if you’re an ongoing business.
Second as you’re laying out next year’s expenses start with your fixed expenses, you know the ones that aren’t going to change or the ones that aren’t going to vary with sales.
Third, what variable expenses do you expect to increase? Perhaps fuel, perhaps healthcare costs.
Fourth, I want you to look at which expenses vary as a function of sales. Things like shipping and any of your cost of goods items are likely to vary.
Fifth what expenses vary as a function of head count. Things like benefits and professional development and employment taxes will vary as a function of headcount.
Six, think about what you’re going to need to do to support your growth goals. We touched on this last week. If you’re gonna grow by 10 or 15%, you’re going to have to do something different and that’s likely to cost money. So make sure you budget for it.
Seventh, separate out payroll in the template that I share with you. You can get it right here (https://bit.ly/3Rq7Cuc). There’s a separate tab for all your employees. This allows you to add new hires at any point during the year, include promotions and any increases.
Eighth, don’t forget any loans you have outstanding. The principal at least doesn’t show up on the P&L but you’re going to need to budget money for it.
Ninth, I want you to set aside some money for a cushion, a little savings for a rainy day or future capital expenses and tenth, and most importantly make sure you’ve budgeted some money for you to get paid if you’re not on payroll.
I’ll be back next week and we’ll continue talking about budgeting with your latest Fiscal Fitness Tip of the Week.