How To Set A Budget For Your First Year In Business

You’ve seen the movies and read the books, you’re familiar with the success stories of Steve Jobs and Harold Matson, two men (among many) who started small, humble businesses in their garages that would one day become long-standing and über successful tech and toy companies throughout the United States and the world. You too want to carve out a piece of success for yourself. Finally having the means to start realizing your small business dreams, you’ve crunched the numbers on your [small business insurance calculator](https://coverhound.com/business-insurance) and think you can do it.

But you’re going to need more than insurance and a goal, you’re going to need to understand the financial fundamentals of running a small business in its first year. CoverHound can show you how.

**Mind the Gap**
One of the biggest mistakes an inexperienced small business owner can make is trying to make a [profit upfront](http://www.cnbc.com/2011/11/02/The-10-Biggest-Mistakes-Made-by-Small-Business-Owners.html?slide=2). Of course the point of going into business is to turn a profit, but most businesses are only able to break even in their first year. As you have thoroughly learned the research you so meticulously combed through before embarking on this new adventure, you know that success does not come overnight; it takes time, patience and A LOT of hard work. It also takes some financial savvy. If you don’t know when to save and where to spend, your business could quickly go under. [Eight out of 10](http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail/&refURL=&referrer=#3bb4b4ae5e3c) businesses fail in their first 18 months, why? They don’t have an understanding of the industry, what it is customers want or how to build a profitable business model.

Developing a strong business acumen starts with understanding what it is your startup is in the business of, what it is consumers want and how much they’re willing to pay for it. How much are you willing to pay to see your business grow and prosper? It all starts with a budget.

**Setting the Budget**
[Inc. Magazine](http://www.inc.com/encyclopedia/businessbudget.html) tells prospective entrepreneurs that there are five things a well-formulated budget should detail:

1.) Funds needed for labor AND materials

2.) Total start-up costs

3.) Cost of operations

4.) Revenue needed to keep the business intact

5.) Accurate estimate of expected profits

But there’s a sixth thing that small business’s need to set up a category for too, and that’s business insurance. You can do everything right by your company and your clients, but there is always going to be someone who disapproves and complains. Sometimes these complaints can lead to your small business being taken to court. Not only does litigation cost you money, but it can also damage your reputation. Small business insurance covers litigation costs and keeps your business going strong and your reputation whole. When you win your court case, your other clients will see how important doing business on the up-and-up is to you, and they’ll realize that there are some people out there who are just sue happy.

Small business insurance keeps your company going when you feel like it’s about to fall apart. Small business insurance supports you, your staff and your customers. Small business insurance is quite possibly the best investment you can make for your business. [Click here](https://coverhound.com/business-insurance) to compare business insurance packages to find the one that works best in your budget.