How to identify and keep track of expenses for your project or small business
What does that word make you think of? Accountants with green visors crunching numbers? Paper pushers and penny pinchers?
The word “budget” used to fill me with a sense of wonder, because I thought there was a magic formula involved. During graduate school, my budgeting and finance professor, Martha Stark, cut through the fog of mystery around budgets—“A budget tells the story of your project, your business or your life in numbers,” she said.
As an integral part of the narrative of your project, your budget can reflect the creativity of your vision—it’s a tool that supports your project’s mission, goals, tasks and timeline. If you’ve taken time to clarify what you need to pay for—as I suggested in my last column, “What do you need money for?”—making a budget is not as difficult as you might think.
A “budget” includes both income and expenses, which are further broken into “line items” for specific expenses and income.
In this installment of the Creative Money Maker, I cover the expense budget and focus on the cost of tangible goods and materials. In the next CMM, I’ll discuss paying yourself and others for their time and services.
Start your budget with a brainstorm.
Make a list of everything you need to accomplish for your project, whether it’s purchasing materials or equipment, renting space, hiring someone with a specialized skill or paying for postage and travel—and definitely include a line for paying yourself.
Once your list is complete, organize it into large categories by grouping similar expenses together. For example, for a mural painting project, paint, brushes, ladders and drop cloths could all go under “Supplies”; whereas, the posters and invitations that you’ll create to promote the opening could be grouped together under “Promotion and Publicity.” Be as detailed as possible. For example, a “website” might include hosting space, domain name registration, design and coding.
Once you have your expenses organized by categories and broken down into line items, you need to attach specific costs to each item. Know the quantity of each item you will need.
Put on your best bargain hunter and researcher hats and scour the Internet and local stores to compare prices. Are you going to need a large amount of a particular material? Would it make sense to buy it in bulk or wholesale? Ask others who use similar supplies as you for their projects—where do they get their materials?
In doing your pricing research, you may ask, “But what if prices change? What if I need more or less of something than I thought?” Your initial budget is a prediction, not a determination, of what will happen in the future. Once your project begins, you’ll compare actual expenses to your projected expenses and adjust your budget accordingly.
Once you have prices attached to your line items, it’s time to face the spreadsheet. While you might wince at the thought of them, the time you take to format a budget in a spreadsheet will save you time and heartache later.
Challenge yourself to learn these spreadsheet basics:
- Formulas that do your arithmetic and calculations for you
- Link cells so that when critical information is updated, the entire sheet updates automatically
- Functions for searching and sorting data
While your project may be simple when you are just starting out, as it grows in complexity, your budget will, too. Spreadsheets enable you to easily make adjustments to your budget and update information. The spreadsheet is like the outline of your project narrative.
Your budget—just like your business, art or project—is your creation. What story do you want your numbers to tell?
Last but not least, here’s a presentation I did for New York Foundation for the Arts:
Want more Creative Money Maker? Click here for the archive.
Eleanor Whitney is a Brooklyn writer, rock musician, educator and arts administrator raised in Maine. She blogs at killerfemme.com and is the author of Grow: How to take your DIY project and passion to the next level and quit your job, which will be released in 2013 on Cantankerous Titles. A proud holder of a master’s in public administration, she loves nerding out about business strategy for creative people and works to guide artists through the fundraising and professional development process. @killerfemme eleanor.whitney [at] gmail.com