A Guide to Setting Up a Working Budget For Your E-commerce Business

As the field of e-commerce continues to be flooded with new regulations, additional fees, and other hidden costs, it’s clear that becoming an online financial tycoon requires quite a bit of money.


Making money online begins with putting down capital in the form of cash, properties, capital investments, and loans. Doing so is necessary for gaining traction— after all, what’s a business without some money? Online businesses are often touted for being a cheap way to become your own boss. However, they are now becoming costlier to start up and maintain because of how fierce the competition can be.


As important as startup cash may be, your initial investment is only one part of the e-commerce financing conundrum. Now, you’ll face another unique challenge: knowing how to spend the money properly.


Allocating a budget for a startup e-commerce business requires you to consider several factors. Your business strategy and goals are, of course, necessary to project long-term performance. It can be easy to assume that setting up and maintaining a budget is easy, especially if you have experience budgeting for your personal expenses. However, budgeting for a business is very different. It’s no secret that putting money in the right places is a fundamental part of any business’s success.


How to set up and maintain a proper working budget for your e-commerce startup

With the implementation and maintenance of a proper working budget, you’ll be able to get your venture off the ground in much less time than if your finances were a mess. Startup budgets, as complicated as they may seem, are fairly easy to build and will lend great results—if the right steps are carried out.


If you’ve been meaning to bring an e-commerce startup to life or are trying to get your current one up and running, here’s a quick guide on how you can set up a budget:


1. Go over each and every one of the “first-day” costs of your startup

The first step to carry out when building a budget for your e-commerce startup is understanding the initial costs you’ll have to take on. Knowing how much it takes to launch your business (with a few conservative contingency tweaks here and there) will provide a sense of direction towards what you have to do.


Regardless of what industry you’re looking to get into, it’s always a good idea to assess how much money you’ll need to get things running. You will want to consider important “day one” startup e-commerce costs such as:

Facilities costs

Materials and supplies

Digital marketing

Fixed assets


2. Take a look at your monthly expenses

After taking a look at how much it will cost to get everything up and running, you’ll have to consider how much keeping everything afloat will set you back. When going over your monthly expenses, you’ll need to take two types of costs into mind, namely the fixed expenses and variable expenses.


Fixed expenses are anything and everything that regularly occurs every month in terms of frequency but do not change in overall value. These types of costs can include anything from equipment lease or rent payments, retainer services, cellphone plans, and other important utilities. Variable expenses, on the other hand, are a type of cost that goes up every time you make and sell more. They also go down when you produce less and sell a lower amount. Getting a clear picture of everything and anything that you’ll have to pay for every month is the last piece of figuring out how much it’s going to take to maintain operations.


3. Compute your monthly revenue

The final key step in setting up a working budget is to take some time to forecast or compute your monthly revenue based on several factors such as past sales, market share, and overall demand. Depending on what type of e-commerce business you’re running, it’s best to assume that no estimations for monthly revenue are the same because different industries have unique purchase frequencies and modes of payment. Once you’ve computed your monthly revenue, you can adjust your budget to meet your projected monthly revenue. Breaking even is a good starting goal that can be followed by increasing profit.


Setting up a working budget for your e-commerce business is one of the best tasks that you can undertake in order to gain an even greater amount of financial control. If you’re fairly new to the idea of setting and maintaining a budget, try our quick guide to get started!


If you are looking for an e-commerce accountant on the Gold Coast to help you create a working budget, get in touch with us to see how we can help.

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