Spending Budgets

So What’s Accrual Accounting and Why Does it Matter?

So you make a sale. When you deliver the goods, you record it as a sale. If the customer didn’t pay you immediately, you record the accrued amount as Accounts Receivable. You order some goods. When you receive them, you don’t pay for them. Instead, you record the accrued amount as Accounts Payable. At the...


Snapshots of Spreadsheets

Just a quick note. I hope it’s obvious. With examples in this book I’m not showing you the full columns of the spreadsheets, because that would be awkward. Numbers would have to be very small and difficult to read. I use my spreadsheets for sales forecasting and other normal monthly projections with a standard layout. I base my...


Sometimes Timing Matters a Whole Lot

Don’t reinvent wheels. Please. As you do your sales forecast, be aware that accountants and financial analysts have definite meanings for timing of sales. If you don’t deal with this their way, then when you do eventually incorporate the work you’ve already done on the sales forecast into more formal financial projections, you’ll have it...


How Could I Know?

One of the more powerful drags on business planning in general is what I call fear of forecasting. Lots of people have it. “How could I possibly know?” is one of the more popular complaints. After all, who can predict the future? How can you know what’s going to happen in the market, with the...


If You Can, Start From Last Year

If you can, whenever you can, start this year’s forecast by putting last year’s forecast onto this year’s spreadsheet. Then revise as needed. One of the real luxuries of the existing and ongoing company, compared with the startup, is that there is data. You have experience. As soon as you have a forecast with last year’s numbers...


Understanding Fixed and Variable Costs and Burn Rate

Costs are among the financial and accounting terms that have specific meanings. You can’t just decide to think of them as what makes sense to you, because the accountants and analysts won’t understand you. They’ll say you are wrong. Ouch. Not pleasant. So, here are some definitions. Cost of Sales The cost of sales is not...


Estimate Spending Related to Sales

Some cost estimates go directly along with the sales forecast, because these are costs that you don’t incur unless you make the sale. If you haven’t already, you might want to read the Understanding Fixed and Variable Costs and Burn Rate, section, with some important definitions. The sidebar here will help too. So I assume you...


Do a Simple Expense Budget

OK, maybe my example in the last illustration is a bit much, but planning is for everybody, all companies, not just the startups, so what the heck. It’s a not-so-small company, but the math is still pretty obvious. The point is that budgeting expenses is a matter of simple math, common sense, and reasonable guesses, without statistical...


1 2

Get the Bplans newsletter:

Expert business tips and advice delivered weekly.