Starting and operating a travel business can be a very exciting and rewarding venture, but it's important to make sure you have a solid financial plan in place to ensure the longevity of your career as a travel professional.

One tool to help you with that is a budget. A budget helps you keep track of your income and expenses, and make sure you are on track to meet your financial goals.

Creating a realistic budget is an important step in managing your business finances and ensuring the financial success and profitability of your travel business in the current year, and long term.

With that said, here are 7 steps you can follow to create a budget your first (or next) budget. 👊

1. Determine your financial goals

Before you start creating your business budget, it's important to have a clear understanding of your financial goals. What are those goals? Do you want to save money for a rainy day fund, pay off debt, or invest in your business? Knowing your financial goals will help you prioritize your expenses and make sure you are allocating your money in a way that aligns with those goals.

2. Gather financial data

The next step is to gather all of the necessary financial data (if you have it). This includes information on past years' income, expenses, and debts (credit cards, loans, etc). You will also need to gather any financial documents, such as bank statements, credit card statements, and sales reports from your CRM, to help you accurately estimate your income and expenses.

3. Identify your routine income sources

Next you will want to list all of the sources of income for your business. This could include revenue from bookings, commissions, fees, and any other sources of income. Once you have that list you'll then estimate how much you expect to earn from each one during the coming year. If you're unsure, start with what you have on the "books" already for client trips traveling in the current year. Then add what you expect to increase during the year. That includes fees collected and travel bookings that you'll collect commission on. This will be your revenue budget or revenue plan.

4. Identify your routine expenses

The next step is to identify all of the expenses associated with your business. You'll want to include items that are fixed, such as rent, utilities, insurance, and other items that you pay consistently from month to month, and year to year. Then you'll want list any variable costs. Variable costs are those that fluctuate based on volume or changes from normal operations. These would include items such as marketing costs, FAM trips, conferences, conventions, and other professional development programs. Maybe your "tech" tools, a mentor or coach.

To get started, use prior year data as a baseline. Gather all expenses you incurred in the course of running your travel business last year. From past data you can begin to make a list of all of your expenses, and estimate how much you expect to spend on each one in the coming year.

Don't forget to budget a salary for yourself!

5. Use a budget template

There are many different tools to create your budget, but one simple method is to use a spreadsheet for a template. You can create this in a program like Excel or Google Sheets. A template will help you organize your income and expenses in a clear and easy-to-read format as well as give you a way to divide them into monthly, quarterly, yearly, and one-time expenses. Plus, spreadsheets do that math for you! Total win there!

6. Enter your income and expenses

Once you have your template set up, the next step is to enter your estimated income and your estimated expenses. Use what you created in Steps 3 and 4 above. This is your budget!

If after subtracting your expenses from your income you have a positive number, this means you are slated to make more money than you are spending, and you are on course to be in good financial shape. If you have a negative number, this means you are planning to spend more than you make. Unless you want to invest personal funds to stay cash positive, changes will need to be made to get back on track with your plan. Those changes can be cutting expenses out and/or bringing more money in.

7. Review and adjust your budget

Once you have created a budget that supports your goals and that you're happy with, it's important to monitor it regularly to make sure you are on track, and stay on track. As the months go on, if you find that you are spending more than you expected in certain areas, you may need to adjust your plan to account for these extra costs. On the other hand, if you are bringing in more income than you expected, you may be able to pay yourself a bonus, add more to your emergency fund, or splurge on a few extra business expenses or investments. Maybe that FAM you've been eyeing!

Creating a budget is an essential part of running any business, large or small. If you're one to find yourself off track frequently, It can help you stay financially organized, and ideally, not overcommit or overspend.

The process can seem intimidating at first, but with a little planning and organization, it is a straightforward. By regularly reviewing and adjusting your budget, you can make sure your travel business is financially successful and sustainable, and even more important able to pay you a salary for your time, effort, and expertise!

Create your own budget checklist:

Here is a quick checklist to get you started with your budgeting process. Remember imperfect action beats inaction, get started and keep going.

• Determine your financial goals for the year

• Gather past financial data (prior year(s))

• Identify your routine income sources

• Identify your routine business expenses

• Create a budget template to easily input the numbers

• Enter your planned income and expenses for the year

• Review and adjust your budget

• Add tracking as part of your monthly money routine

• Use this budget as a guide when making financial decisions during the year