Last week we talked about budgeting revenue and direct costs to come up with projected gross profit over the next year. Now it’s time to move on to overhead expenses. This is a great time to review the expenses over the last twelve months in detail. You should review each expense and ask, “Is the benefit worth the cost?” Most likely, you’ll find that at least some of your expenses can be cut completely. If you expect the price of any of your expenses to increase over the next year be sure to include those increases in your budget. Also, consider if you will have to make any major purchases over the next twelve months and include estimates of those expenses as well. Once you have completed this piece you can now project net profit over the next year. Next week we’ll talk about reviewing your budget on a consistent basis.
