Budgeting for Investors: Budgeting is not only important for you and your company, it is important for investors. If somebody wants to invest in your business, they will mostly base their decision upon your budget.
Through your budget investors they can determine your financial health, the viability of your business and its long-term potential. They look at how you’ve budgeted for future plans and whether or not you’ve put realistic numbers on it.
So how do you create a budget that will impress investors? You need to give answers, accurate numbers and a clear plan.
Before starting your company, you have to know how much it is going to cost you to run it. How much money do you need to cover expenses every month? Is your rent, internet, cost of materials covered? Will you be able to afford future plans and actions? These questions have to be answered in your budget.
Developing a budget
Creating a budget can be either easy or complicated. It depends on your operations and whether or not you can get a close estimate. If you’re budgeting at home, you can download free templates off the internet and start right away. Googling “budget templates” will straight up give you over 20 free templates on the front page.
Accuracy in budgeting
Budgets are a guideline. In startups, as hard as you try, the numbers on your budget don’t always meet what happens in reality. However, every month your budget will improve. It begins by looking back on each month and comparing your projections with your month-end performance. Eventually, as time goes on your budget becomes more realistic and higher in accuracy.
New businesses can use secondary data from other businesses in the industry to help build their budget. You can find multiple resources online which gives you industry averages. For example, if you’re starting a restaurant, you’ll find averages for telephone usage, materials, and labor online.