Keep it simple – budgeting

One of my biggest goals for 2013 is to be smarter with my business finances: to cut frivolous costs, be strategic with the revenue coming in and keep a close eye on our budget to make sure we’re running a smart business.

This is not my strongest skill. By far. I’m creative. I like to make patterns and play with colors. Anything that has to do with Excel or number crunching typically makes me squirm a little. Besides, I prefer pen and paper : ). Mid-2012 I decided I needed to get a hold on things. I started really getting into our accounting software (more on that in a minute) and created an awesome (and pretty, if I may say so myself) Excel spreadsheet to serve as my budget for the remainder of the year.

Now that 2013 is almost upon us, I’ve reworked that spreadsheet for the new year. And with that, I’ve reworked our entire budget. Bring it on, 2013!

One thing I’ve realized as I’ve dived more and more into the business of the business in the last four years is that I’m a very visual person. Put simply, if it’s not visually appealing and (even more) simple / minimal, I’m not going to use it. This is why I’m a Mac-snob (Admittedly. By the way, did you know they’re making an iWatch? I will be first in line).

I gave up on Quickbooks years ago. And I fell in love with Outright.com at the suggestion of a friend. It’s easy, it’s inexpensive and its simple. I have complete control over how I set it up too, so that makes me happy. I now have my budget and Outright built to mimic each other. THIS is the key. Now, here’s how I budget. (Note: I am definitely NOT an accountant. Every business person needs a good accountant. Consult with them about your business finances. These are just tips for what works for me.)

1. Create an Outright.com account. Their service was free for a long time and they’ve just started charging. It’s worth it. Get your business accounts linked and set up your income and expense categories. Be certain you keep this simple BUT name the categories names that work for you. For the longest time, I had one “income” category. Now I break out Shop Income, Making Brands Happen Income, Making Brands Happen Client Collateral Income, Consulting Income, etc. I also created expense categories that made sense. For instance, I separate income from my shop, Making Brands Happen and Making Brands Happen Client Collateral. That way I can compare categories on both sides to make sure I’m covering my costs throughout the year. (For instance, when I look at my Shop Income compared to my Shipping Expenses and Cost of Goods Sold Expenses I can be sure we’re not losing money anywhere.) Keep it simple here. Don’t create a gazillion categories or you wont be able to use your data effectively.

2. Then, download my free 2013 Budget Template HERE. Open it in Excel and make it work for you. I’ve filled in the categories with sample categories and sample numbers (no, these are not the ones I use, just filler names to get you started). First decide the income you’d like to make for the year, then work backwards through the categories to make the sum of each add up to the larger income total. Do the same for expenses. Be sure you’re covering costs. Once you’ve got this laid out, distribute your budgeted expenses and income throughout the months to the right of your yearly table. Now, read this carefully. This is important: Your categories in your spreadsheet MUST match your categories in Outright. 

3. Monthly, you’ll login to outright and make sure all of your income and expenses for the month are categorized correctly. Be sure you have NO uncategorized line items. Then, every month, go to REPORTS and select YOUR SPENDING. Select the month view (table format) and enter your numbers into your spreadsheet in the box that says ACTUAL for each category for that month. The spreadsheet will automatically calculate the difference between what you’ve budgeted and what you’ve earned or spent. VALUABLE DATA!

This has been REALLY eye opening for me the last few months, especially after a VERY busy holiday season for the shop. I caught a lot of frivolous expenditures and places where we could afford to do more. Wishing everyone a wonderful 2013!!

Happy New Year!

xo,

Emily

PS: Heard about our 2013 Powerful Branding Webinar Series starting January 16? Our first in the series is brand new: Set Yourself Up for Success (all about clearing clutter, setting boundaries and making what matters happen). Join us! Seats are limited and filling quickly!

15 Comments

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15 Comments

  1. Katie Saeger commented:

    Thank you for sharing this! One of my biggest 2013 goals is to be smarter with our business and personal finances as well and hearing about this site (and having your pretty worksheet) is going to be a great start to the year! Happy New Year Emily!!!

  2. Madaline Meatte commented:

    WOW! this is awesome! exactly what me and my little design shop needed!

  3. Shelby Laine Thomas commented:

    I love this! Thank you!! It is very helpful!

    Quick question: Will y’all be doing a Making Things Happen tour again in 2013? I’m so bummed that I couldn’t come to the 2012!

  4. kristen commented:

    Thank you for OutRight! We use Mint for personal finances, but I’ve been searching everywhere for something similar just for small business.

  5. diana commented:

    Thanks for posting! And thanks for sharing the spreadsheet. I really appreciate it Emily! Thank you, thank you!

  6. Bridgett commented:

    Thanks Emily! This made everything so much simpler! I just finished creating categories and updating my (not used) Outright account. 2012 taxes…DONE! Also, anyone reading this, Outright is offering tax documents for FREE until tomorrow (12/31 @ 11:59pm). If you have time tomorrow, link all of your accounts, create your categories and bam, taxes are done. Happy New Year!

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  8. Kristy commented:

    Thank you for sharing! I opened my outright account tonight and am working on 2013 budget for my embroidery business. After 3 years, I guess it is time to seriously watch the numbers.

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  12. Courtnie commented:

    Hi Emily,

    Thanks so much for the valuable info! I feel like I’m definitely getting my year off to a great start. Do you have any suggestions for invoicing? What program do you use?

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  14. Petronella commented:

    Emily, thank you for saying you gave up on Quickbooks. I did too after I took a course on it… but so many people use it, I thought I was weird for not getting it. I use Mint now but I’m signed up with Outright now. Thanks!

  15. Pingback: Keep it simple – business | Emily Ley

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