New entrepreneurs may need to learn about budgets

[December 19, 2011]  NEW YORK (AP) -- Many brand-new entrepreneurs learn quickly that they have to create a budget for their new companies. It can be a daunting experience for someone who doesn't have an accounting background or never maintained a personal budget.

Business owners who don't create a budget and stick to it are likely to find they don't know how much money is coming in, and how much is going out. If they keep trying to run the business that way, they're likely to run into trouble.

There is plenty of help for budget neophytes. If you're one of them, it's a good idea to give yourself a quick education about budgets, and to meet with an accountant or other financial adviser to learn about what items you need to have in your company's budget.

THE BASICS

To get a grounding in budgets, you can start with the Internet or a bookstore. There are websites that explain the basics and guide you through creating a very simple plan. There are books that explain the process too. If you buy accounting and recordkeeping software, you can get a feel for what budgeting requires.

When you start a budget, at the very least you need to list your income and expenses -- what you expect each to be, and then the actual numbers. Subtracting one number from the other will let you know if you're staying within your budget. You can keep a weekly, monthly, quarterly or yearly budget. The more you work on your budget, the better a handle you'll have on your business.

But you also need to consider what to put into your budget -- in other words, you need to know all the costs of running your business as you put your budget together. For example, do you know all the taxes you have to pay for running a business in your state? If your business is the sort that's licensed, have you included that fee in your budget? Did you budget for insurance?

You need to have an accountant or financial adviser who understands the needs of small businesses. And who can help you start thinking about running a company on a budget.

WHERE TO LEARN MORE

Many small business owners realize that while they're great at running the substance of their business -- operating a restaurant or a design firm -- they know little about how to conduct the financial side of things. Many decide to get some schooling.

Small Business Development Centers provide training and advice to small business owners. Many of these centers, sponsored by the Small Business Administration, offer low- or no-cost courses on financial management, including budgeting. There are SBDCs across the country, many of them at colleges and universities. Colleges that offer continuing education classes are another resource. These may cost more than SBDC classes, but can also be fairly low-cost.

The service known as SCORE offers one-on-one help for small businesses. The organization consists of retired executives and business owners. You can find a SCORE counselor who can help you with budgeting by visiting www.score.org. You can work with a counselor online, or find one that you can meet with in person.

NO TIME TO BUDGET?

One reason that many small business owners don't have a budget, or have a very haphazard one, is they don't have the time to work on it. They're busy trying to build the business, meet with customers and deliver their product or service. This is another instance where you need to get help.

After you've met with an accountant and created a budget, you need a bookkeeper to keep track of your income, receipts and expenses. You also need a report -- weekly is best, but certainly monthly -- that lets you know whether you're staying within your budget or are running into trouble.

You can get a bookkeeping service without spending a fortune. Your accountant will be able to help you find one. You could also hire an accounting student as an intern.

If you're insisting on doing the work yourself, invest in software. Your accountant can suggest some. Or ask other small business owners about the program that works for them.

[Associated Press; By JOYCE M. ROSENBERG]

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