Breakeven + Budgeting Guide for Creatives
You've asked and I've delivered. Here is an easy step-by-step guide to creating a budget.
What this is used for: break-even. This is what it costs to keep your "lights on". The budget that has nothing to do with creative production but simply what you need to even have a business - it helps drive how you can determine what you need to produce to "break-even", get it?
Open an excel spreadsheet and let's go.
First: Identify your fixed costs.
These are your monthly costs that don't change.
Rent
Supplies
Software
Materials
Office supplies
Utilities - phone, internet
Insurance
Bookkeeping
Second: Identify your variable costs.
Marketing expense
Meals and entertainment
Travel
Continued Education
Equipment
Wardrobe/Props
Now you should have expenses with monthly expenses listed side by side. To get an annual total, multiply this by 12 - this is your grand total annual costs.
Third: Do the same for one-time-a-year expenses (Fixed and Variable)
Business License
Membership Dues
CPA Fees *wink*
Add these totals to your grand total annual costs. You should now have a number staring back at you. This is the total of all your expenses for the year that you need just to BREAK EVEN.
To take it a step further, you can divide by 12 so you know how much to produce per month.
Questions to ask yourself:
1. Are your sales able to cover these costs AND give you the profit you want?
2. Do you have monthly sales goals?
3. Do you have a plan to grow and stay on top of these costs and eventually upgrade/expand?
If the answers to these are no, let's talk. I have CFO Services specifically for Creatives to help price, budget and forecast for your business - all using your goals as a driver. Whether its dolla dolla bills, ideal schedule, or expansion.
