It costs money to start and run a business. In previous articles, I've mentioned that, to start an emerging manager business, you need to anticipate a budget of at least $50,000/year, expecting no revenue coming in for the first two years. Many people questioned that number - they thought it too high - but if you follow the below exercise, you'll not only understand why I said that, you'll have a working model to gauge your progress and allow you to stay on target.

This month's column is timely in that it's tax season; a perfect time for you to be able to look back and see what you spent last year (and previous years) and then create a reasonable budget for 2017. To be certain that the money you spend turns into future revenue, you have to plan your work, anticipating the expenses as best you can and then work your plan.

Look at what you've spent historically on various expenses

• Start by capturing all of your expenses and income. Most probably, there won't be much income... yet. But be sure to capture every transaction you've made and every dollar you've spent since you started your business. You'll be surprised to see how quickly the expenses add up.
• Identify recurring transactions. Your bank account and credit cards are great places for you to identify these expenses. These expenses necessarily occur every month, so don't try to ignore them. When you become more aware of expenses that are part of your ongoing operation, you can begin to evaluate them (are they necessary?) plan for them and track them on a regular basis.
• Identify one-off costs such as registration, legal documents, computer costs. While they may be one time expenses, there will be other, similar ones, that you can expect to incur going forward.So leave a placeholder for other types of one-off "rainy day" costs.
• Now put your accumulated information together into both a preliminary "......................

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  This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.