Question

Prepare a budget (one month) for An Internet Startup Advertising company. This Internet company has 3 people: Software developer, sales, website maintenance/accounting. These 3 people founded this company by themselves, they are in different locations and work from their homes. All figures should be reasonable.

Answer 1

Preparation of a Budget for a Internet Start-Up Advertising Company:

Estimated Revenue:

Since the company is a start-up it is not much well-known and has only three clients at present.All of these clients are small businesses and does not have a high advertising budget.We will call these clients as A,B and C.

Client A is willing to pay $ 250 per month

Client B is willing to pay: $ 150 per month

Client C is willing to pay only $ 100 per month

Assuming that the company will accept all three clients:

Estimated Revenue: = $250+$150+$100 ie. $500

Estimated Expenses:

Since the company operates from remote position , therefore there will be no office infrastructure cost.

The sales guy will have to acquire clients and to do that that person will have to advertise, go on social media or cold call, we club together all these expenses under the heading: Client Acquisition Cost .

Client Acquisition Cost is $ 120 per month

Acquiring Clients is half of the case the clients have to stay so the sales guy has to give discounts and other promotions to attract and retain them as well as provide them after sales services.We will club this expense under the head: Client Retention Cost

Client Retention Cost is $ 100 per month

Since this business primarily runs on internet it will require a website and it's maintenance and development.Also as mentioned these three people work in different locations and hence have to communicate and work with each other.So they will require internet to carry out this as well as some communication media.Lets club this as operating costs .

Operating Costs for a month is $ 110 per month

We assume that for the time being these three people are not taking any payments as salaries and are putting their salaries back into the business.

Now every business has some miscellaneous cost .

Miscellaneous costs for a month is $10 per month

Thus, using the information as given above: Estimated Expenses=$120+$100+$110+$10 ie. $ 340

So, Budget for one month:

Estimated Revenue= $ 500

Estimated Expenses= $ 340

Budget Surplus= $160