Every business should have a business plan with very detailed start-up and operating budgets. For a new business, the budget is a living, breathing entity that changes as you learn and grow.

Ideally, you want the changes to happen in your favor with higher-than-projected sales and lower production costs. More likely, you will be under budget because of things you either forgot or did not know about.

Theft

If you have an inventory-based business then shoplifting and employee theft can be a major problem. Habitual shoplifters steal a little less than twice per week on average, tend to steal from the same stores, and take anywhere between $2 and $200 in goods, according to shopliftingprevention.org. This does not take into account employee theft, which can include inventory or office items. For any business with valuable goods, you will either need to budget in loss or consider installing a security system to prevent theft.

Waste

Accounting for waste, spillage, or scrap is a rather sophisticated part of cost accounting in manufacturing that many new businesses do not understand. If a hypothetical doughnut shop purchases 50 pounds of sugar per week, some of this will be lost from spillage, one ingredient in a doughnut could go bad, or the vendor may have supplied inaccurate measurements. Not only will you under budget for the amount you actually need, but waste needs to be removed — and that also incurs a cost.

Marketing

There’s a difference between advertising and marketing. Coming up with an accurate advertising budget that includes fliers, ads and mailers is relatively simple. Marketing, however, is a little more elusive. Before sending out your first mailer, you will need to know your market demographic. This takes a bit of research, which, depending on your scope, may incur costs. You may want to do the research yourself, but every hour you spend researching is an hour lost to selling. Take a look at the cost of marketing research and put that into your start-up budget.

Do you need help growing your business? Click here to check out the social media marketing and website design packages from The Sherwood Group. We’ll help you capture new business and achieve your goals.

Fees, Fees and More Fees

You want to lease space. There is a brokerage fee. You need water. There is a one-time set up fee. You want to register your business. Yes, there is a fee for that. Almost every piece of paperwork you create at the beginning of a new business comes with a cost. If you need to hire a professional, like an accountant, lawyer, or contractor, then you will have a lot of unbudgeted expenses. The rub is that these high-priced professionals are extremely important to your business. Having an accountant help set up your bookkeeping at the beginning will save you a world of problems later down the road. Don’t skimp; just budget properly.

Permitting

Licensing, permitting and other documentation that allows you to do business has a cost. If you need a license to conduct business, then don’t forget about the inevitable continuing education costs and membership fees.

The Unforeseeable

The biggest threats to your budget are things you simply do not know or could never predict. A pipe bursts. A hurricane hits. A loved one dies. You can easily generate a list of horrible events, but that will not help in times of crisis. Instead, create a sustainability plan and devote some money to this line item to shore up any deficits that may arise.

If you enjoyed this post, you may also want to check out these others:

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Responsive Web Design: A Single Trend That Can Dominate the Success of Your Business
How your small business can win BIG clients
FREE: How to Use Google+ to Advertise Your Business
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This article is published by Will Sherwood | The Sherwood Group |Website Design | Graphic Design | Marketing Communications: The Sherwood Group has over 30 years of experience working with all sorts of companies, small and large. Our clients range from entrepreneurs to Fortune 500 firms, in nearly every business sector, from across the street to around the world (and yes, even Europe, China, and South America). Our goal is to create advertising,  graphic design, website design, and marketing communication that still looks fresh and relevant 10-15 years later. Our mission is to stir your imagination and leave your competition shaken and wondering,  Now what do we do?”  We are located in Myrtle Beach, South Carolina.

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