Business expenses can quickly spiral out of control without a budget in place. Use the sample budget to the right to quickly see all your planned business expenses in one place and contrast them against actual expenses. While it's true that you have to spend money to make money, closely monitoring the budget for your candle making business may well determine whether your business operates at a profit or a loss.
Startup costs include the one-time expenses required to launch a new business. For example:
- Expect to pay fees for licenses and permits.
- You will also need to stock up on your initial supplies.
- You may need to purchase items like shelving or fire extinguishers.
- If you work in a leased space, you may need to put down security deposits with your landlord and utility companies.
Typically, these expenses will not need to be included in your budget after your first year in business.
Key in the amounts you expect to spend in the budget column. After these expenses are paid, input the amount you actually spent in the next column. The spreadsheet will automatically calculate the difference and present it as a percentage.
These are the expenses involved in actually making your products. Some standard supply items, like waxes and wicks, may need to be purchased frequently, while others, like molds or melting pots, may need to be purchased only once or twice each year. Again, simply enter the amounts you expect to spend, as well as your actual expenses, and the spreadsheet will calculate the variance or you.
Administrative costs are those expenses associated with controlling or directing your business activities. They range from mileage charges when you drive to the post office, to insurance premiums, to ink for your printer.
You can also include the costs associated with developing new products here. Not every product idea you have will turn out perfectly the first time you produce it. You may discover that a scent is too strong or the color too pale and decide to tweak your formula before adding it to your product line. Costs associated with this process are known as research and development expenses.
Interest on business loans and depreciation also fall into the administrative category. Speak with your accountant to determine how to calculate these amounts.
Marketing and Advertising Expenses
Most candle makers will not conduct full-scale marketing campaigns. Even so, you will likely have expenses associated with setting up a website, creating a logo, designing your packaging, or even printing business cards. All are examples of marketing and advertising expenses.
Facilities expenses are the costs associated with the physical location where you do business. Even if you operate your business out of your home, you may want to consider having your company pay rent to you. Your business telephone charges and a portion of your utility bills also fall into this category. Discuss with your accountant whether to pay yourself rent for take a home office deduction on your taxes.
You don't have to have a full-time staff to incur labor expenses. You may elect to pay yourself a salary, withholding payroll taxes, or pay yourself as a contract employee. Any fees that you pay to legal, accounting, or marketing professionals, or even paying a local teen to deliver flyers, all fall under the category of labor expenses.
Any taxes not associated with payroll should be entered into this section. These include taxes you pay on business profits, as well as property taxes on any vehicles, real estate, or other property owned by your business.
In the sales revenue category, simply enter the amount of money you received from the sale of your candles. Your total expenses, as well as your net profit or loss will be auto calculated for you and deducted from your revenues. The resulting number is the amount of profit your business earned, or the amount of money it lost.
Every business budget is unique, and the downloadable spreadsheet is designed to be adaptive to your particular needs. You may choose to incorporate line items for things like wax additives or mold release agents, or delete line items like social media or office supplies. This is a rough sample of what a candle making business budget may look like, but use your own numbers to make it really come alive.
|Item||Budgeted Amount||Actual Amount||Variance||% Variance|
|Licenses and permits||$125||$125||$0.00||0%|
|Marketing and Advertising|
|Contract labor (self)||$5,000||$5,000||$0||0%|
In this example you earned $5,000 as a contractor in your own business and still had a profit of $1,515.27 remaining. You may reinvest profits in your business, or take a payout for yourself.
Each year you will refine your sales tactics and learn new ways to trim expenses, hopefully increasing your profit margins. A budget will help you stay on task and take some of the guesswork out of running your business.