Creating and managing a budget are fundamental to running a business. A budget allows you to forecast how much revenue you expect to have at your disposal during a given time period, as well as how you might use this revenue to maintain or grow your practice. Managing your budget means considering several factors, ranging from whether or not you're exceeding or falling short of your revenue projections to how revenue and expenses are used in your marketing strategies to objective information about where you are in terms of your financial goals.
Creating a Budget
- Make a list of the categories in which you anticipate spending and receiving money. For example, typical expenses are oils, lotions, equipment, office supplies, advertising, utilities, laundry services, utilities, and telecommunications. Typical revenue categories might be by different types of massage (for example, relaxation, on-site, sports/fitness), sale of merchandise, and fees from contractors.
- For each item on your list, estimate for each month what you will spend or receive in that category. Calculate quarterly and annual totals in each category. To ensure a profit, the amount you plan to spend should be less than the amount you plan to receive.
Managing a Budget
- Review your budget at least once a month. Assess whether your actual expenses are running ahead or behind where you forecasted them. Is there a need to change your spending or your budget? If your revenues are falling short, how can you improve your situation? If your revenues are higher than projected, are you satisfied with the balance of work vs. personal time in your life?
- Based on last years budget, create a new budget at the end of each year to plan for the following year. Revise your business strategy to reflect your new budget.
- Revise your budget as necessary. Remember that it is a guideline that you created, not an inflexible trap.
Learn more about estimating monthly expenses and keeping good financial records, two things that can help make creating and managing a budget easier.