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Budget Management for Startups

Understanding what goes into a startup's budget

Creating a budget for a startup can seem akin to doing makeup on your daughter’s imaginary friend or arguing with your mother-in-law: pointless.

Making a business plan for a startup is difficult. New companies are constantly changing, acquiring additional costs at the drop of a hat. This can make figuring out your monthly costs exceptionally challenging.

So how can you budget for a startup?

Startup Costs

Employee’s Salaries

The more, the merrier, doesn’t apply to the hiring process. More employees can mean more costs and a larger budget. For more information on hiring plans, read this article.

This Causal template can help you figure out when to hire new employees based on your revenue.

It’s essential to budget for the salaries of the employees you currently have and future employees as well. The Employee Compensation Calculator can find the perfect salary to fit your budget and entice employees to join your startup.

Rent

There’s nothing wrong with working out of your mother’s basement. Under Armor founder, Kevin Plank made his first designs in his grandmother’s basement. That being said, the best talent is unlikely to want to work in a space that smells laundry detergent and hardware.

Even if you don’t have space currently, budgeting for rent is essential if you want your company to grow.

Loans

If your company took out a loan to help with startup costs, budgeting to repay these loans is essential.

Cost of Product

This cost is likely to change depending on how much you sell and how much product you make. That being said, it’s essential to include this cost.

Advertising

It’s 2021, and posting bulletins at your supermarket won’t cut it. Advertising is expensive but worthwhile. Our Google Ads Forecaster will help you budget for your ad campaign.

Market Research

Conducting market research is essential. It can help you figure out the demand for your product, lower your churn rate, and advertise successfully. Causal makes market research easy with clean templates that’ll do all the work for you.

License, Insurance, etc

Having a startup is exciting. The liability that comes with it is not. Unfortunately, these expenses are essential.

Personal salary

The costs associated with a new company makes paying yourself a salary difficult. That being said, unless you aren’t quitting your day job, you still need to bring in an income. Our Founder Break-Even Calculator will show you when you’re projected to break even.

Optional Costs

Many startups make the mistake of budgeting for the bare minimum. Oftentimes, optional costs can pay off big time.

Employee benefits

Working at a startup comes with inherent risks but can also offer significant rewards. It’s up to the company to entice the best talent to come on board. Check out this template to help design a recurring liquidity program.

Travel Costs

As your company grows, you may find yourself traveling to meet with investors, clients, and companies. Sometimes these costs can slip under the radar, but anyone who has ever parked in a big city understands how much these fees can add up.

Growth

Budgeting for growth will help your company understand the additional expenses in its future. Budgeting for development is budgeting with the assumption that your company will be successful. If you don’t add this to your budget, you’re assuming your company will fail to grow.

Budget for Disaster

So you’ve created a budget, but how accurate is it? Causal understands that life is unpredictable.

In a perfect world, your startup would launch without incident. Your employees, investors, and partners would be ecstatic, and a Disney bird would fly through the window and sing to you as you count your stack of money.

Unfortunately, it’s not a movie, and disasters are the norm rather than the exception.

Your intern will accidentally crash a company car. Your supply will mysteriously get lost in transit. An employee will quit unexpectedly, requiring an expensive last-minute hire.

Having a budget for these events can decrease stress and mitigate additional financial damage. Our models give you ranges rather than numbers so that you can plan for any situation and budget successfully.

Give Yourself a Runway

You’ve calculated your cost per month, now what?

Hopefully, you’ve figured out how to fund your startup. If not, check out this article. (insert a link to my recent startup funding article)

Our Startup Runway Calculator can help you figure out how long you have to start making revenue before your funding runs dry. JP Morgan suggests a startup runway of 12-18 months.

Your costs, also known as your net burn rate, directly influence how long your runways will be.  The more runway, the better.

How Causal can help

Our Startup Suite has everything you need to budget for your startup. Our templates can help you determine how well your company is doing, and make the financial decisions easy and clean.

By sharing our Employee Compensation Calculator, your employee will be able to see a clean and clear model explaining the value of their stock options.

We even have templates devoted to Saas startups! Our clean, beautiful models can help keep your team informed of everything from your new and churned MRR to your subscriber numbers. Having all of the information you need in one place, will make budgeting decisions simple.

Budgeting for a startup doesn’t need to be a shot in the dark. Make informed decisions with Causal.

Want to learn more? Get started with Causal for free

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