1) If you were to improve your selected website, how would you prioritize your budget? Begin by listing everything that went into making the website. Decide which elements need improving. Then, rank them from 1-5, for example, where one is the highest priority (i.e. most money would be spent) and 5 is the lowest priority (i.e. least amount of money would be allocated).

2. Be prepared to justify your rankings.

1.) There are a lot of things to keep on top of when you create a company, from marketing and finding new customers to creating a website and developing your digital presence.

But from the very beginning, there's one thing that you want to keep on top of and that's your business budget.

If you want to create a thriving, profitable business, making a comprehensive and precise budget is a must. But how do you make one, exactly?

Let's take a look at how five easy, straightforward steps can build a small business budget.

Let's quickly cover what a company budget is before we get into how to build a business budget, and why it's so important for your small business.

An summary of the finances of your corporation is a business budget. It details both the present state of your finances (including income and expenses) and your long-term financial priorities with key information. It should be one of the first tasks you discuss, since your budget will play a key role in making sound financial decisions for your company.

And you'll also want to have a budget in place to support you as a financially smart company owner:

Make financial decisions that are sound. Your company budget is like a financial road map in many respects. It lets you determine where your company finances actually are and what you need to do in the future to reach your financial goals.

Identify where spending is to be cut or income to rise. Your business budget will help you define areas for reducing your expenditure or increasing your profits, which in the process can improve your profitability.

Land funding to make your company expand. You would need to have a comprehensive budget that details your revenue and expenditures if you are looking to apply for a business loan or collect funds from investors.

First stuff first. You need to find out how much money your company takes in each month and where the money comes from while building a small business budget.

A great place to start is your sales figures (which you can view using the Profit & Loss report feature in FreshBooks). From there, during the month, you can add some other revenue sources for your company.

Depending on your business model, your total number of income sources will vary.

For instance, if you run a freelance writing company, you might have multiple revenue sources from:

Projects for freelance writing

A course on writing that you sell on your website

Consulting with other authors who are launching small companies

Or you can only have one source of revenue from your store sales if you operate a brick-and-mortar retail business.

Make sure to account for any and all income that flows into your company, however many income sources you have then count all those sources to get a clear picture of your total monthly income.

Stage 2: Determine fixed costs

When you have a handle on your profits, starting with fixed costs, it's time to get a handle on your costs.

Any expenses that remain the same from month to month are your fixed costs. This may include expenditures such as leasing, some services, website hosting, and payroll costs (such as internet or phone plans).

Check your expenses to see the costs have remained the same from month to month (either through your bank statements or through your FreshBooks reports). These are the costs that you can categorize as fixed expenses.

When these expenses are calculated, add them together for the month to get your overall fixed cost costs.

Variable costs do not come with a set price tag and can vary depending on the success and operation of your company each month. This may include items such as energy depending on use such as electricity or gas), shipping costs, commissions on sales or travel costs.

Variable costs will vary from month-to-month, by definition. You can invest more on the variables that will help your company scale faster when your revenues are higher than expected. But if your earnings are smaller than expected, consider decreasing these variable costs before your profits can be increased.

Tally up the variable expenditures at the end of each month. Over time, you can get a sense of how certain expenditures fluctuate with the success of your company or during certain months, which will help you make more detailed financial forecasts and prepare accordingly.

Phase 4: One-time spending forecast

Many of your company expenses, whether they be fixed or variable costs, would be daily expenses that you pay for each month. But there are still expenses that are going to happen even less often. But don't forget to also consider those costs in your budget.

If you know that you have one-time costs on the horizon (such as an upcoming business course or a new laptop), adding them to your budget will help you set aside the financial resources required to cover those expenses and protect your business from a sudden or significant financial burden.

You can also add a buffer to cover any unplanned purchases or expenses, such as repairing a broken mobile phone or hiring an IT analyst to deal with a security breach, in addition to adding planned one-time costs to your budget. That way, you're prepared when an unforeseen expense comes up (and they always do)

Phase 5: Bring it together

You have collected all of your sources of revenue and all of your expenses. And what is next? Pulling it all together to get a comprehensive picture of your monthly financial status.

You would want to measure your total revenue and your total expenditures on your business budget (i.e., adding your total fixed costs, variable expenses and one-time spending) and then compare the cash flow in (income) to the cash flow out (expenses) to assess your overall profitability.

Have a tough time visualizing in motion what a company budget looks like? To give you an idea of what your new business budget could look like each month, here's a budgeting example: