Creating a Budget and Sales Forecast

In the income category, conservatively estimate how much sales revenue you'll have next year. Look at what you made last year, and extrapolate and forecast from that. New business owners without

this kind of history should try to determine how much their competitors gross, and use that as a guide. Remember to be realistic. If you paint too rosy a picture, you can easily get in over your head and spend money that never materializes. If you make more than your projected income, great. But if you make less, watch out!

As far as expenses go, consider advertising, auto, insurance, rent, taxes, phone, utilities, equipment, payroll — in other words, any and all business expenses, whether you pay them now or incur them in the future.

Once you see your projected income and expenses on paper, you'll know exactly how much you need to make every month to keep things afloat, and how much you'll have left over for extra expenses. It will be far less tempting to spend money on business expenses that aren't part of your plan. And that's really what a budget is for — to ensure that your expenses aren't more than your income, so you can keep your company afloat. It's as simple as that.