Simple Budgets for Startup Businesses

Budgeting
Every successful businessman or woman knows that every business needs a budget and unless your business is very large and complex, you don't need an accountant to draw up a working budget: all you need is a simple spreadsheet and a few hours of concentrated effort.
So let's make a start
Open up your spreadsheet programme: Microsoft Excel or equivalent
The Time Line is set out across the top of the spreadsheet. Each column in the spreadsheet corresponds to a month so Jan, Feb, March, April etc
You need to do this so that you can calculate your cash flow.
Revenue and Cost
The horizontal lines - the rows - of the spreadsheet correspond to cost and revenue heads: wages, heating, postage, equipment hire etc.
Revenue and Cost Items
The revenue and cost items are subdivided into three main groups:

1. Your expected operating income i.e. your payments
2. Your operating outgoings i.e. wages, purchases for stock etc
3. Your capital expenditure i.e. the payments you make for capital goods or services that you will use over an extended period of time.

Capital Items
Capital items are normally depreciated. You might buy a van and expect it to last three years of operation. This every month you would charge your operation 1/36th of the cost of your van as a 'depreciation' charge.
Next Steps
Now lay out your months across the top of the spreadsheet leaving one column - on the left - blank. Then start on your costs and revenue in that spare left hand columns.
Start with a main heading 'Revenue'
Break out your expected sales into the various parts: shop sales, internet sales etc etc. Remember that sales only come in when you get paid: ie not when you buy the goods, or sell the items or raise the invoice.
When you have listed all your sales, month by month, use the spreadsheet's mathematical functions to add all your sales in your monthly columns, month by month.
Then start on your costs
Organise your cost items in groups

1. Purchases of stock etc
2. Property costs: mortgages, rents, property taxes, heating lighting etc
3. Wages including tax, insurance and other costs of employment
4. Transport, fuel maintenance etc but not depreciation
5. Other operating costs, postage, telephone bills, bank charges (excluding interest) legal and professional fees and anything else that might have been missed above.
6. Finance costs - leave blank for now.

Operating Margin or Contribution
Then add all these up and subtract them from your sales as calculated above. This is your operating margin (net of depreciation and interest) and likely to be negative for the first few months until your sales start to come through.
Now start on your Capital Costs.
List all your purchases of capital items, vehicles, computers, shop outfitting and place them in the month you will have to pay them. Add these up column by column to calculate your 'investment'
Depreciation
Below this, decide for each capital item how long it will last before you need to replace it (usually in years) Multiple this by 12 to calculate the working life in months and make an item for each investment calculated as (Original Investment)/(working life) i.e. the 'Depreciation'