Marian Fletcher, 55, says that despite all the time she spent planning the initial budget for the party-planning and catering service she launched from her home, she still somehow overlooked some major expenses.
"The budget I prepared has been working pretty well, but I ran into a couple of problems because I forgot to add in certain things," Fletcher explains. "Like taxes. I knew I was going to have to pay taxes on whatever profits I made, but I didn't even think about the sales and use taxes that I must pay on whatever I buy or sell. Having expanded my business to include one full-time employee and six part-timers, I didn't even think about having to pay money out for the employee's taxes. There are so many different kinds of taxes, and those little things really mean a lot. They add up very quickly and can offset even the best-laid plans."
Unlike most small-business owners who budget 12 months at a time, Fletcher prefers to plan her budgets six months at a time, due to the cyclical nature of the party-planning and catering profession. "With this type of business, it's more precise to budget six months at a time, rather than annually, because you book most of your jobs well ahead of time, and demand for your services comes in cycles, depending on the time of year," she says. "Although weddings and other big affairs, such as anniversary parties, tend to book one year in advance, most other parties only book ahead three to six months. By planning a budget six months at a time, you get a much clearer picture of how much money you're going to make, and what your expenses will be."
When it came time to prepare her first budget, Fletcher was a student at Women Entrepreneurs of Baltimore City (WEB), a local entrepreneurial education program. Her instructors there provided guidance in budgeting realistically. "They gave us a form to go by," she says, "which included such items as: rent; insurance; costs of goods sold; transportation, storage and postage expenses; post office box rental; and different things like that. It was a very long sheet. The funny thing is that it also contained a special place for taxes-if only I'd known at the time everything that was involved! Except for overlooking those taxes, though, the budget has really worked."