example of budget plan for business

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How to Create a Business Budget for Your Small Business

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A business budget estimates future revenue and expenses in detail, so that you can see whether you’re on track to meet financial expectations for the month, quarter or year. Think of your budget as a point of comparison — you run your actual numbers against it to determine if you’re over or under budget.

From there, you can make informed business decisions and pivot accordingly. For example, maybe you find that your expenses are over budget for the quarter, so you may hold off on a large equipment purchase.

Here’s a step-by-step guide for creating a business budget, along with why budgets are crucial to running a successful business.

» MORE: What is accounting? Definition and basics, explained

QuickBooks Online

How does a business budget work?

Budgeting uses past months’ numbers to help you make financially conservative projections for the future and wiser business decisions for the present. If you’ve had a few bad months and predict another slow one, you can prepare to minimize expenses where possible. If business has been booming and you’re bringing in new customers, maybe you invest in buying more inventory to satisfy increased demand.

Creating a business budget from scratch can feel tedious, but you might already have access to tools that can help simplify the process. Your small-business accounting software is a good place to start, since it houses your business’s financial data and may offer basic budgeting reports.

To create a budget in QuickBooks Online , for example, you break down your estimated income and expenses across each area of your business. Then, the software calculates figures like gross profit, net operating income and net income for you.

You can then compare actual versus projected figures side by side by running a Budget vs. Actuals report. Businesses that need more in-depth features, like cash flow forecasting or the ability to use different projection methods, might subscribe to business budgeting software in addition to accounting software.

If your small business doesn’t have access to these features or has simple financials, you can download free small-business budget templates to manually create and track your budget. Regardless of which option you choose, your business will likely benefit from hiring an accountant to help manage your budget, course-correct when the business gets off track, and make sure taxes are being paid correctly.

Why is a business budget important?

A business budget encourages you to look beyond next week and next month to next year, or even the next five years.

Creating a budget can help your business do the following:

Maximize efficiency. 

Establish a financial plan that helps your business reach its goals. 

Point out leftover funds that you can reinvest.

Predict slow months and keep you out of debt.

Estimate what it will take to become profitable.

Provide a window into the future so you can prepare accordingly.

Creating a business budget will make operating your business easier and more efficient. A business budget can also help ensure you’re spending money in the right places and at the right time to stay out of debt.

How to create a business budget in 6 steps

The longer you’ve been in business, the more data you’ll have to inform your forward-looking budget. If you run a startup, however, you’ll want to do extensive research into typical costs for businesses in your industry, so that you have working estimates for revenue and expenses.

From there, here’s how to put together your business budget:

1. Examine your revenue

One of the first steps in any budgeting exercise is to look at your existing business and find all of your revenue sources. Add all those income sources together to determine how much money comes into your business monthly. It’s important to do this for multiple months and preferably for at least the previous 12 months, provided you have that much data available.

Notice how your business’s monthly income changes over time and try to look for seasonal patterns. Your business might experience a slump after the holidays, for example, or during the summer months. Understanding these seasonal changes will help you prepare for the leaner months and give you time to build a financial cushion.

Then, you can use those historic numbers and trends to make revenue projections for future months. Make sure to calculate for revenue, not profit. Your revenue is the money generated by sales before expenses are deducted. Profit is what remains after expenses are deducted.

2. Subtract fixed costs

The second step for creating a business budget involves adding up all of your historic fixed costs and using them to reliably predict future ones. Fixed costs are those that stay the same no matter how much income your business is generating. They might occur daily, weekly, monthly or yearly, so make sure to get as much data as you can.

Examples of fixed costs within your business might include:

Debt repayment.

Employee salaries.

Depreciation of assets.

Property taxes.

Insurance .

Once you’ve identified your business’s fixed costs, you’ll subtract those from your income and move to the next step.

3. Subtract variable expenses

As you compile your fixed costs, you might notice other expenses that aren’t as consistent. Unlike fixed costs, variable expenses change alongside your business’s output or production. Look at how they’ve fluctuated over time in your business, and use that information to estimate future variable costs. These expenses get subtracted from your income, too.

Some examples of variable expenses are:

Hourly employee wages.

Owner’s salary (if it fluctuates with profit). 

Raw materials.

Utility costs that change depending on business activity.

During lean months, you’ll probably want to lower your business’s variable expenses. During profitable months when there’s extra income, however, you may increase your spending on variable expenses for the long-term benefit of your business.

4. Set aside a contingency fund for unexpected costs

When you’re creating a business budget, make sure you put aside extra cash and plan for contingencies.

Although you might be tempted to spend surplus income on variable expenses, it’s smart to establish an emergency fund instead, if possible. That way, you’ll be ready when equipment breaks down and needs replacing, or if you have to quickly replace inventory that's damaged unexpectedly.

5. Determine your profit

Add up all of your projected revenue and expenses for each month. Then, subtract expenses from revenue. You may also see the resulting number referred to as net income . If you end up with a positive number, you can expect to make a profit. If not, that’s a loss — and that can be OK, too. Small businesses aren’t necessarily profitable every month, let alone every year. This is especially true when your business is just starting out. Compare your projected profits to past profits to confirm whether they’re realistic.

6. Finalize your business budget

Are the resulting profits enough to work with, or is your business overspending? This is your opportunity to set spending and earning goals for each month, quarter and year. These goals should be realistic and achievable. If they don’t line up with your projections, make sure to establish a strategy for making up the difference.

As time goes on, regularly compare your actual numbers to your budget to determine whether your business is meeting those goals, and course correct if necessary.

» MORE: Ways your small business can spend smarter

A business budget projects future revenue and expenses so you can create a smart, realistic spending plan. As the year progresses, comparing your actual numbers against your budget can help you hold your business accountable and make sure it reaches its financial goals.

A business budget includes projected revenue, fixed costs, variable costs and the resulting profits. You can also factor in contingency funds for unforeseen circumstances like equipment failure.

On a similar note...

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7 free small business budget templates for future-proofing your finances

As a small business owner, you're likely balling with a lot more than your personal checking account. If you don't properly manage your business finances, there's more on the line than an overdraft fee—you now have an entire organization to account for.

Small business budgets are necessary to balance revenue, estimate how much you'll spend, and project financial forecasts, so you can stay out of the red and keep your business afloat.

But creating a small business budget template isn't a small task. Since I don't have a business to run, I did the heavy lifting for you—check out these free, downloadable templates for your small business budgeting.

Table of contents:

2. Overhead budget template

3. multiple-project budget template.

4. Startup budget template 

5. Labor budget template

6. cash flow budget template, 7. administrative budget template, periodic budget reviews, how to design your small business budget plan, small business budget faq, 1. static budget template.

Best for: Multiple departments or revenue streams; Industries with complex operations

A static budget combines all the function-specific budgets a business uses into one. Typically, a static budget includes the following items (plus any other budgets your business might use):

Cash flow projections: Estimations of how much money will flow into and out of your business. They also help you decide when, how, and what you should spend money on.

Total expected spending: All estimated expenses, including labor and administrative costs. 

By integrating all of your budgets and projections, the static budget provides a full picture of your business's estimated expenses and financial strategy for the upcoming fiscal year. 

Best for: Service-based businesses

It's easy to forget about expenses that aren't directly tied to production, like delivery charges or utilities. But these costs exist (and can add up quickly), so you need an overhead budget. A detailed overhead budget template will include:

Administration expenses

It compares your budgeted amount to actual figures (warning: it may be a rude awakening) and can help improve accuracy for future financial planning. 

Predicting overhead spending helps you plan how to use other funds more practically too—if you know how much you'll spend on overhead, you can make better business decisions. For example, you'd know whether you can afford to invest money into other initiatives like adding a delivery service or upgrading equipment.

Best for: Project-based industries

If you're managing multiple projects like website development or event planning, each with its own budget and expenses, you need a multiple-project budget to help keep your head on straight. This type of budget will help you track the following items per project:

Product-by-product COGS (cost of goods sold)

Labor costs

Equipment and resource costs

Indirect project expenses like travel

A multiple-projects budget establishes estimates for everything you need to get projects across the finish line. It also lets you track costs to ensure you're not spending more than you accounted for in the budget.

4. Startup budget template

Best for: New small businesses and startups

Startups need to ensure financial success from the get-go, so they can reinvest profit into the business and potentially attract more investors. 

But unlike established small businesses, you don't have past financial data to base expenses on. That's why you need a startup budget to focus on expenses for your first year of business, including items like:

Funding from investors and loans

Licensing and permits

Logo and website design

Website domain

Business software

Security installation 

Overhead expenses

Capital expenses

Best for: Larger businesses with lots of employees

Unless you're a one-person show, you'll need a labor budget. And even if you are a one-person show, it's good to know if you can afford to pay yourself. A labor budget breaks down all employee-related costs like: 

Payroll taxes

Contract labor

Break down employee costs into direct, indirect, fixed, and variable categories to clarify how your company allocates its resources. You can also consider different scenarios more easily when you understand the breakdown of labor costs.

For example, you can simulate the impact of adding or reducing staff in specific departments or assess the effects of different compensation structures on different teams.

An accurate forecast of labor costs ensures you can sustainably meet your staffing needs and can help you make informed hiring decisions. Down the road, it can also help you determine if you can afford to give your staff raises, bonuses, or additional benefits.

Best for: Businesses with fluctuating income and expenses; Seasonal businesses; Retail

As important as it is to be mindful of how much money you're spending, you should also track how much money you're making . A cash flow budget helps estimate how money is flowing in and out of your business. It includes:

Starting balance (set at the beginning of the month, quarter, or year)

Projected cash inflow from all revenue streams

Estimated cash expenditures

Ending balance (calculated at the end of the month, quarter, or year)

This type of budget lets you proactively manage your resources, anticipate potential cash shortages, and strategize for growth. For instance, if you know you're only going to break even this year, you may wait on expanding or making a large investment. 

Best for: Businesses focused on streamlining operations

An administrative budget includes all those general expenses that the company as a whole needs to function. This type of budget accounts for: 

Depreciation expenses

Training and development

Communication expenses

Accounting fees

While you could technically include administrative expenses in an overhead budget and call it a day, a separate administrative budget gives more of an eagle-eye view of how well your business is operating. 

Without an eye on administrative costs, you may be spending unnecessarily or lose focus on areas where it'd be wiser to invest your money. In other words, you could be spending way too much on fancy pens when you should be saving up to upgrade your cash register. 

A budget isn't a "set it and forget it" deal. Regular budget reviews can help you stay on track with your financial goals and respond proactively to changing market conditions. 

You should compare your estimated budget to actual spending. Then you can see where you went over and where you can splurge more. Try to review your budget monthly, quarterly, and yearly.

Monthly: Compare actual performance against your budgeted figures for the month. Identify any deviations and look for insights into cash flow, sales trends, and expense management.

Quarterly: Dive deeper into performance over the last three months. Use trends to project revenue and expenses for the upcoming quarter and identify areas for improvement.

Yearly: Reflect on your long-term financial objectives for the fiscal year. Assess the effectiveness of your budgeting strategies, and set new budget targets for the upcoming year. 

It's cliched but true: you gotta spend money to make money. But that's no excuse to start throwing cash at your business willy-nilly.

Budgeting forces you to prioritize your objectives, so you spend money on the things that matter most. Here's how to create a small business budget in four steps:

Identify your working capital for the budgeting period. Add up your current assets like cash, accounts receivable, and inventory. Then subtract current liabilities like accounts payable and short-term debt. The remaining amount is what you have left to cover your operational expenses during the budgeting period.

Separate business and personal expenses. If you haven't already, open a dedicated business bank account. This makes it easier to track, categorize, and analyze your finances.

Determine your fixed and variable costs. Make a list of costs that stay the same every month (fixed costs) and what changes (variable costs). These will change based on the purpose of the budget. For instance, a labor budget will only consider employee-related costs.

Calculate your total expenses. Add up all the costs for your business, including fixed costs, variable costs, labor, and any other applicable expenses. This total is how much your business needs to run. Any leftover money from your working capital can be allocated toward other business investments. 

Budgeting methods

If you've budgeted before and hated it, you may just have been using an ineffective budgeting method for your preferences. Here are a few budgeting methods to try instead: 

Traditional: This budget is set for a determined amount of time and uses last year's numbers as a benchmark. Once you set your budget, you don't change it unless you get approval for an adjustment.

Rolling: This dynamic approach spans a continuous time frame instead of a fixed time period. As each month or quarter passes, you add a new budget period and drop the oldest period. This lets businesses adjust projections based on real-time performance and market conditions.

Flexible: This budget changes along with your sales forecast. As real-time sales activity deviates from budgeted amounts, you recalculate the budget to reflect the new data. 

Still don't know where to start with your small business budget? Check out the answers to these common questions before you open a new Google Sheet.

What should a business budget include?

A business budget should include all income sources and expenses. Income sources could include projected revenue from sales, loans, or potential investor funding. Expenses may include items like office space rent, employee salaries, insurance, and marketing. Add anything that helps paint a full picture of your finances.

How much does the average small business startup cost?

The average small business startup costs $40,000 in its first year of business. But this will absolutely vary depending on your type of business, unique expenses, and cash income. For instance, there are multiple types of businesses you can start with $10,000 or less.

What is the best free business budgeting software?

The best free budgeting business software will depend on what your business needs, but you can try apps like Mint or Wave. Or you can use a spreadsheet—scroll up for some free small business budget templates.

Automate your small business

Knowing when or where to invest money into your business is just one of the many tasks you have on your plate as a small business owner. Learn how automation for small businesses can help take some of those recurring tasks off your hands, so you can focus on growing your business. 

Related reading:

The best free small business software

The best CRMs for small businesses

How to create effective document templates

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Cecilia Gillen

Cecilia is a content marketer with a degree in Media and Journalism from the University of South Dakota. After graduating, Cecilia moved to Omaha, Nebraska where she enjoys reading (almost as much as book buying), decor hunting at garage sales, and spending time with her two cats.

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The Best Free Business Budget Templates

Published: October 12, 2023

Business budgets are a source of truth for your income and expenses. That includes all the money you spend — from A/B testing your marketing campaigns to your monthly office rent.

While organizing the numbers may sound difficult, using a business budget template makes the process simple. Plus, there are thousands of business budget templates for you to choose from.

We’ll share seven budget templates that can help organize your finances. But first, you’ll learn about different types of business budgets and how to create one.

What is a Business Budget?

A business budget is a spending plan that estimates the revenue and expenses of a business for a period of time, typically monthly, quarterly, or yearly.

The business budget follows a set template, which you can fill in with estimated revenues, plus any recurring or expected business expenses.

For example, say your business is planning a website redesign. You'd need to break down the costs by category: software, content and design, testing, and more.

Having a clear breakdown will help you estimate how much each category will cost and compare it with the actual costs.

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Types of Budgets for a Business

Master budget, operating budget, cash budget, static budget, departmental budget, capital budget, labor budget, project budget.

Business budgets aren’t one size fits all. In fact, there are many different types of budgets that serve various purposes. Let’s dive into some commonly used budgets:

Think of a master budget as the superhero of budgets — it brings together all the individual budgets from different parts of your company into one big, consolidated plan. It covers everything from sales and production to marketing and finances.

It includes details like projected revenues, expenses, and profitability for each department or business unit. It also considers important financial aspects like cash flow, capital expenditures, and even creates a budgeted balance sheet to show the organization's financial position.

The master budget acts as a guide for decision-making, helps with strategic planning, and gives a clear picture of the overall financial health and performance of your company. It's like the master plan that ties everything together and helps the organization move in the right direction.

Your operating budget helps your company figure out how much money it expects to make and spend during a specific period, usually a year. It not only predicts the revenue your business will bring in, but also outlines expenses it will need to cover, like salaries, rent, bills, and other operational costs.

By comparing your actual expenses and revenue to the budgeted amounts, your company can see how it's performing and make adjustments if needed. It helps keep things in check, allowing your business to make wise financial decisions and stay on track with its goals.

A cash budget estimates the cash inflows and outflows of your business over a specific period, typically a month, quarter, or year. It provides a detailed projection of cash sources and uses, including revenue, expenses, and financing activities.

The cash budget helps you effectively manage your cash flow, plan for cash shortages or surpluses, evaluate the need for external financing, and make informed decisions about resource allocation.

By utilizing a cash budget, your business can ensure it has enough cash on hand to meet its financial obligations, navigate fluctuations, and seize growth opportunities.

A static budget is a financial plan that remains unchanged, regardless of actual sales or production volumes.

It’s typically created at the beginning of a budget period and doesn’t account for any fluctuations or changes in business conditions. It also assumes that all variables, such as sales, expenses, and production levels, will remain the same throughout the budget period.

While a static budget provides a baseline for comparison, it may not be realistic for businesses with fluctuating sales volumes or variable expenses.

A departmental budget focuses on the financial aspects of a specific department within your company, such as sales, marketing or human resources.

When creating a departmental budget, you may look at revenue sources like departmental sales, grants, and other sources of income. On the expense side, you consider costs such as salaries, supplies, equipment, and any other expenses unique to that department.

The goal of a departmental budget is to help the department manage its finances wisely. It acts as a guide for making decisions and allocating resources effectively. By comparing the actual numbers to the budgeted amounts, department heads can see if they're on track or if adjustments need to be made.

A capital budget is all about planning for big investments in the long term. It focuses on deciding where to spend money on things like upgrading equipment, maintaining facilities, developing new products, and hiring new employees.

The budget looks at the costs of buying new stuff, upgrading existing things, and even considers depreciation, which is when something loses value over time. It also considers the return on investment, like how much money these investments might bring in or how they could save costs in the future.

The budget also looks at different ways to finance these investments, whether it's through loans, leases, or other options. It's all about making smart decisions for the future, evaluating cash flow, and choosing investments that will help the company grow and succeed.

A labor budget helps you plan and manage the costs related to your employees. It involves figuring out how much your business will spend on wages, salaries, benefits, and other labor-related expenses.

To create a labor budget, you'll need to consider factors like how much work needs to be done, how many folks you'll need to get it done, and how much it'll all cost. This can help your business forecast and control labor-related expenses and ensure adequate staffing levels.

By having a labor budget in place, your business can monitor and analyze your labor costs to make informed decisions and optimize your resources effectively.

A project budget is the financial plan for a specific project.

Let's say you have an exciting new project you want to tackle. A project budget helps you figure out how much money you'll need and how it will be allocated. It covers everything from personnel to equipment and materials — basically, anything you'll need to make the project happen.

By creating a project budget, you can make sure the project is doable from a financial standpoint. It helps you keep track of how much you planned to spend versus how much you actually spend as you go along. That way, you have a clear idea of whether you're staying on track or if there are any financial challenges that need attention.

How to Create a Business Budget

While creating a business budget can be straightforward, the process may be more complex for larger companies with multiple revenue streams and expenses.

No matter the size of your business, here are the basic steps to creating a business budget.

1. Gather financial data.

Before you create a business budget, it’s important to gather insights from your past financial data. By looking at things like income statements, expense reports, and sales data, you can spot trends, learn from past experiences, and see where you can make improvements.

Going through your financial history helps you paint a true picture of your income and expenses. So, when you start creating your budget, you can set achievable targets and make sure your estimates match what's actually been happening in your business.

2. Find a template, or make a spreadsheet.

There are many free or paid budget templates online. You can start with an already existing budget template. We list a few helpful templates below.

You may also opt to make a spreadsheet with custom rows and columns based on your business.

3. Fill in revenues.

Once you have your template, start by listing all the sources of your business’ income. With a budget, you’re planning for the future, so you’ll also need to forecast revenue streams based on previous months or years. For a new small business budget, you’ll rely on your market research to estimate early revenue for your company.

When you estimate your revenue , you're essentially figuring out how much money you have to work with. This helps you decide where to allocate your resources and which expenses you can fund.

4. Subtract fixed costs for the time period.

Fixed costs are the recurring costs you have during each month, quarter, or year. Examples include insurance, rent for office space, website hosting, and internet.

The key thing to remember about fixed costs is that they stay relatively stable, regardless of changes in business activity. Even if your sales decrease or production slows down, these costs remain the same.

However, it's important to note that fixed costs can still change over the long term, such as when renegotiating lease agreements or adjusting employee salaries.

5. Consider variable costs.

Variable costs will change from time to time. Unlike fixed costs, variable costs increase or decrease as the level of production or sales changes.

Examples include raw materials needed to manufacture your products, packaging and shipping costs, utility bills, advertising costs, office supplies, and new software or technology.

You may always need to pay some variable costs, like utility bills. However, you can shift how much you spend toward other expenses, like advertising costs, when you have a lower-than-average estimated income.

6. Set aside time for business budget planning.

Unexpected expenses might come up, or you might want to save to expand your business. Either way, review your budget after including all expenses, fixed costs, and variable costs. Once completed, you can determine how much money you can save. It’s wise to create multiple savings accounts. One should be used for emergencies. The other holds money that can be spent on the business to drive growth.

Free Business Budget Templates

Manage your business, personal, and program spend on an annual, quarterly, and monthly basis.

• Personal Budget Template
• Annual Budget Template
• Program Budget Template

You're all set!

Click this link to access this resource at any time.

Fill out the form to get the free templates.

How to manage a business budget.

There are a few key components to managing a healthy business budget.

Budget Preparation

The process all starts with properly preparing and planning the budget at the beginning of each month, quarter, or year. You can also create multiple budgets, some short-term and some long-term. During this stage, you will also set spending limits and create a system to regularly monitor the budget.

Budget Monitoring

In larger businesses, you might delegate budget tracking to multiple supervisors. But even if you’re a one-person show, keep a close eye on your budget. That means setting a time in your schedule each day or week to review the budget and track actual income and expenses. Be sure to compare the actual numbers to the estimates.

Budget Forecasting

With regular budget tracking, you always know how your business is doing. Check in regularly to determine how you are doing in terms of revenue and where you have losses. Find where you can minimize expenses and how you can move more money into savings.

Why is a Budget Important for a Business?

A budget is crucial for businesses. Without one, you could easily be drowning in expenses or unexpected costs.

The business budget helps with several operations. You can use a business budget to keep track of your finances, save money to help you grow the business or pay bonuses in the future, and prepare for unexpected expenses or emergencies.

You can also review your budget to determine when to take the next leap for your business. For example, you might be dreaming of a larger office building or the latest software, but you want to make sure you have a healthy net revenue before you make the purchase.

Best Free Business Budget Templates

1. marketing budget template.

Knowing how to manage a marketing budget can be a challenge, but with helpful free templates like this marketing budget template bundle , you can track everything from advertising expenses to events and more.

This free bundle includes eight different templates, so you can create multiple budgets to help you determine how much money to put toward marketing, plus the return on your investment.

2. Small Business Budget Template

For small businesses, it can be hard to find the time to draw up a budget, but it’s crucial to help keep the business in good health.

Capterra offers a budget template specifically for small businesses. Plus, this template works with Excel. Start by inputting projections for the year. Then, the spreadsheet will project the month-to-month budget. You can input your actual revenue and expenses to compare, making profits and losses easy to spot.

3. Startup Budget Template

What if you don’t have any previous numbers to rely on to create profit and expense estimates? If you are a startup, this Gusto budget template will help you draw up a budget before your business is officially in the market. This will help you track all the expenses you need to get your business up and running, estimate your first revenues, and determine where to pinch pennies.

4. Free Business Budget Template

You might be familiar with Intuit. Many companies, big and small, rely on Intuit’s services like Quickbooks and TurboTax. Even if you don’t use the company’s paid financial services, you can take advantage of Intuit’s free budget template , which works in Google Sheets or Excel.

It features multiple spreadsheet tabs and simple instructions. You enter your revenue in one specific tab and expenses in another. You can also add additional tabs as needed. Then, like magic, the spreadsheet uses the data in the income and expense tabs to summarize the information. This template can even determine net savings and the ending balance.

5. Department Budget Sheet

A mid- to large-size company will have multiple departments, all with different budgetary needs. These budgets will all be consolidated into a massive, company-wide budget sheet. Having a specific template for each department can help teams keep track of spending and plan for growth.

This free template from Template.net works in either document or spreadsheet formats. This budget template can help different departments keep track of their income and spending.

6. Project Budget Template

Every new project comes with expenses. This free budget template from Monday will help your team estimate costs before undertaking a project. You can easily spot if you're going over budget midway through a project so you can adjust.

This template is especially useful for small companies that are reporting budgets to clients and for in-house teams getting buy-in for complex projects.

7. Company Budget Template

Want to keep track of every penny? Use this template from TemplateLab to draw up a detailed budget. The list of expenses includes fixed costs, employee costs, and variable costs. This business template can be especially useful for small businesses that want to keep track of expenses in one, comprehensive document.

Create a Business Budget to Help Your Company Grow

Making your first business budget can be daunting, especially if you have several revenue streams and expenses. Using a budget template can make getting started easy. And, once you get it set up, these templates are simple to replicate.

With little planning and regular monitoring, you can plan for the future of your business.

Editor's note: This post was originally published in September 2021 and has been updated for comprehensiveness.

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A How-To Guide for Creating a Business Budget

Amanda Smith

Reviewed by

September 23, 2022

This article is Tax Professional approved

Most business owners know how important a business budget is when it comes to managing expenses and planning for the future—but in a challenging economic environment like the one we’ve been experiencing, your business budget takes on even greater significance.

With inflation running rampant and the possibility of a recession looming, business owners need to be able to forecast their cash flow, manage their expenses, and plan for the future. Creating a detailed business budget is the first step.

Whether you want to revamp your budgeting method, or you’ve never created a business budget before, this guide will walk you through the process.

What's Bench?

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What is a business budget?

A budget is a detailed plan that outlines where you’ll spend your money monthly or annually.

You give every dollar a “job,” based on what you think is the best use of your business funds, and then go back and compare your plan with reality to see how you did.

A budget will help you:

• Forecast what money you expect to earn
• Plan where to spend that revenue
• See the difference between your plan and reality

What makes a good budget?

The best budgets are simple and flexible. If circumstances change (as they do), your budget can flex to give you a clear picture of where you stand at all times.

Every good budget should include seven components:

1. Your estimated revenue

This is the amount you expect to make from the sale of goods or services. It’s all of the cash you bring in the door, regardless of what you spent to get there. This is the first line on your budget. It can be based on last year’s numbers or (if you’re a startup ), based on industry averages.

2. Your fixed costs

These are all your regular, consistent costs that don’t change according to how much you make—things like rent, insurance, utilities, bank fees, accounting and legal services, and equipment leasing.

Further reading: Fixed Costs (Everything You Need to Know)

3. Your variable costs

These change according to production or sales volume and are closely related to “ costs of goods sold ,” i.e., anything related to the production or purchase of the product your business sells. Variable costs might include raw materials, inventory, production costs, packaging, or shipping. Other variable costs can include sales commission, credit card fees, and travel. A clear budget plan outlines what you expect to spend on all these costs.

The cost of salaries can fall under both fixed and variable costs. For example, your core in-house team is usually associated with fixed costs, while production or manufacturing teams—anything related to the production of goods—are treated as variable costs. Make sure you file your different salary costs in the correct area of your budget.

Further reading: Variable Costs (A Simple Guide)

4. Your one-off costs

One-off costs fall outside the usual work your business does. These are startup costs like moving offices, equipment, furniture, and software, as well as other costs related to launch and research.

5. Your cash flow

Cash flow is all money traveling into and out of a business. You have positive cash flow if there is more money coming into your business over a set period of time than going out. This is most easily calculated by subtracting the amount of money available at the beginning of a set period of time and at the end.

Since cash flow is the oxygen of every business, make sure you monitor this weekly, or at least monthly. You could be raking it in and still not have enough money on hand to pay your suppliers.

6. Your profit

Profit is what you take home after deducting your expenses from your revenue. Growing profits mean a growing business. Here you’ll plan out how much profit you plan to make based on your projected revenue, expenses, and cost of goods sold. If the difference between revenue and expenses (aka “ profit margins ”) aren’t where you’d like them to be, you need to rethink your cost of goods sold and consider raising prices .

Or, if you think you can’t squeeze any more profit margin out of your business, consider boosting the Advertising and Promotions line in your budget to increase total sales.

7. A budget calculator

A budget calculator can help you see exactly where you stand when it comes to your business budget planning. It might sound obvious, but getting all the numbers in your budget in one easy-to-read summary is really helpful.

In your spreadsheet, create a summary page with a row for each of the budget categories above. This is the framework of your basic budget. Then, next to each category, list the total amount you’ve budgeted. Finally, create another column to the right—when the time period ends, use it to record the actual amounts spent in each category. This gives you a snapshot of your budget that’s easy to find without diving into layers of crowded spreadsheets.

See the sample below.

Pro tip: link the totals on the summary page to the original sums in your other budget tabs . That way when you update any figures, your budget summary gets updated at the same time. The result: your very own budget calculator.

You can also check out this simple Startup Cost Calculator from CardConnect. It lays out some of the most common expenses that you might not have considered. From there, you can customize a rough budget for your own industry.

Small business budgets for different types of company

While every good budget has the same framework, you’ll need to think about the unique budgeting quirks of your industry and business type.

Seasonal businesses

If your business has a busy season and a slow season, budgeting is doubly important.

Because your business isn’t consistent each month, a budget gives you a good view of past and present data to predict future cash flow . Forecasting in this way helps you spot annual trends, see how much money you need to get you through the slow months, and look for opportunities to cut costs to offset the low season. You can use your slow season to plan for the next year, negotiate with vendors, and build customer loyalty through engagement.

Don’t assume the same thing will happen every year, though. Just like any budget, forecasting is a process that evolves. So start with what you know, and if you don’t know something—like what kind of unexpected costs might pop up next quarter— just give it your best guess . Better to set aside money for an emergency that doesn’t happen than to be blindsided.

Ecommerce businesses

The main budgeting factor for ecommerce is shipping. Shipping costs (and potential import duties) can have a huge impact.

Do you have space in your budget to cover shipping to customers? If not, do you have an alternative strategy that’s in line with your budget—like flat rate shipping or real-time shipping quotes for customers? Packaging can affect shipping rates, so factor that into your cost of goods sold too. While you’re at it, consider any international warehousing costs and duties.

You’ll also want to create the best online shopping experience for your customers, so make sure you include a good web hosting service, web design, product photography, advertising, blogging, and social media in your budget.

Inventory businesses

If you need to stock up on inventory to meet demand, factor this into your cost of goods sold. Use the previous year’s sales or industry benchmarks to take a best guess at the amount of inventory you need. A little upfront research will help ensure you’re getting the best prices from your vendors and shipping the right amount to satisfy need, mitigate shipping costs, and fit within your budget.

The volume of inventory might affect your pricing. For example, if you order more stock, your cost per unit will be lower, but your overall spend will be higher. Make sure this is factored into your budget and pricing, and that the volume ordered isn’t greater than actual product demand.

You may also need to include the cost of storage solutions or disposal of leftover stock.

Custom order businesses

When creating custom ordered goods, factor in labor time and cost of operations and materials. These vary from order to order, so make an average estimate.

Budgeting is tricky for startups—you rarely have an existing model to use. Do your due diligence by researching industry benchmarks for salaries, rent, and marketing costs. Ask your network what you can expect to pay for professional fees, benefits, and equipment. Set aside a portion of your budget for advisors—accountants, lawyers, that kind of thing. A few thousand dollars upfront could save you thousands more in legal fees and inefficiencies later on.

This is just scratching the surface, and there’s plenty more to consider when creating a budget for a startup. This business startup budget guide from The Balance is a great start.

Service businesses

If you don’t have a physical product, focus on projected sales, revenue, salaries, and consultant costs. Figures in these industries—whether accounting, legal services, creative, or insurance—can vary greatly, which means budgets need flexibility. These figures are reliant on the number of people required to provide the service, the cost of their time, and fluctuating customer demand.

Small business budgeting templates

A business budget template can be as simple as a table or as complex as a multi-page spreadsheet. Just make sure you’re creating something that you’ll actually use.

Create your budget yearly—a 12-month budget is standard fare—with quarterly or monthly updates and check-ins to ensure you’re on track.

Here are some of our favorite templates for you to plug into and get rolling.

• The Balance has a clear table template that lists every budget item, the budgeted amount, the actual amount, and the difference between the two. Use this one if you’re looking to keep it simple.
• Capterra has both monthly and annual breakdowns in their Excel download. It’s straightforward, thorough, and fairly foolproof.
• Google Sheets has plenty of budget templates hiding right under your nose. They’re easy to use, and they translate your figures into clear tables and charts on a concise, visual summary page.
• Smartsheet has multiple resources for small businesses, including 12-month budget spreadsheets, department budget templates, projection templates, project-by-project templates, and startup templates. These templates are ideal if you’re looking for a little more detail.
• Scott’s Marketplace is a blog for small businesses. Their budget template comes with step-by-step instructions that make it dead simple for anyone.
• Vertex42 focuses on Excel spreadsheets and offers templates for both product-based and service-based businesses, as well as a business startup costs template for anyone launching a new business.

Budgeting + bookkeeping = a match made in heaven

Making a budget is kind of like dreaming: it’s mostly pretend. But when you can start pulling on accurate historical financials to plan the upcoming year, and when you can check your budget against real numbers, that’s when budgets start to become useful.

The only way to get accurate financial data is through consistent bookkeeping.

Don’t have a regular bookkeeping process down pat? Check out our free guide, Bookkeeping Basics for Entrepreneurs . We’ll walk you through everything you need to know to get going yourself, for free.

If you need a bit more help, get in touch with us. Bookkeeping isn’t for everyone, especially when you’re also trying to stay on top of a growing business—but at Bench, bookkeeping is what we do best.

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How to Create a Business Budget

12 Min Read | Sep 28, 2023

Entrepreneurs are idea generators on steroids. They’re risk takers, visionaries and motivated mavericks. But getting them to nail down the details of running a business can be like trying to nail Jell-O to a tree. The thing is, your business can’t run unless you carefully handle priorities like creating your business budget. In fact, bad accounting is the main reason many small businesses fail.

If you’re a small-business owner, you know firsthand that every penny counts. That means you need to count every penny that comes in or goes out of your company! When you run your business on commonsense financial principles, you’re setting yourself up to be like the little pig who built his house out of bricks, not hay or sticks.

And the other really good news? You don’t have to be a numbers and spreadsheets person to build the skills you need to make a solid business budget and manage your company’s finances with confidence.

What Is a Business Budget?

A business budget is a plan for how you’ll spend the money your business generates—every month, quarter and year. It gives you a roadmap for predicting and tracking expenses, revenue and profit. It also helps you decide what to do with business profit, when and where to cut spending and grow revenue, and how to invest for growth when the time comes.

Leadership expert John C. Maxwell sums it up: “A budget is telling your money where to go instead of wondering where it went.”

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Why Do I Need to Budget for My Business?

Your business won’t survive without budget. It’s that simple. Sound dramatic? Check this out: There are 32.5 million small businesses in the United States. Out of the small businesses that opened from 1994 to 2019, 32.4% of them closed within their first two years. And only half of small businesses survive after five years. 1

The main reasons these businesses went under? They didn’t start with enough money in the bank, missed their revenue projections, didn’t pay their quarterly or payroll taxes, and hit the wall with cash-flow problems. But you can do better than that just by applying a handful of important money principles:

• Control your cash flow.
• Spend less than your business is earning.
• Move at the speed of cash (aka no debt).
• And (you knew it was coming) actively follow a budget to do all of the above like a financial ninja.

As a business owner, one of the worst feelings in the world is wondering whether you’ll be able to keep your doors open—and money problems are almost always at the heart of that fear. We can’t say it enough: Budgeting helps  you  stay in control. And staying in control keeps you from feeling stressed out and freaked out. So if you want more business peace of mind, create a business budget.

How to Create a Budget for a Small Business in 10 Steps 

While you’ll eventually need to create annual and quarterly budgets, just start small for now. Try setting up a monthly budget and making that a keystone habit (aka a habit that helps kick-start other habits). This is the easiest way to stay out of the weeds but still crush your goal of controlling your finances.

Every business goes through five distinct stages. Find out which stage your business is in with our free assessment.

Here’s how to create a business budget:

1. Keep your personal and business accounts separate.

Things always get messy when you mix your personal funds with your business funds. Keep your records clean by having separate accounts and budgets for home and work. You don’t have to form a legal corporation or get a tax ID number to create your business account. You can open a simple sole proprietorship account in the DBA (doing business as) for using your social security number.

Pro tip: Deposit every single dime of your business income into your business account. Never pay any personal expenses from this account. And only pay business expenses from this account. In other words: Don’t use your personal account to pay business expenses, and don’t use your business account to pay personal expenses. Not only does this keep you organized, but it also lets you see if you’re profitable.

2. Choose your budgeting tool.

Decide where you’ll keep your budget—whether that’s in an app like  EveryDollar , an Excel file or accounting software. And as your business gets bigger, it’s a good idea to get guidance from a tax advisor. You’ll need a tax preparer or CPA to make a profit and loss (P&L) statement for you. This statement is just a way to look in the rearview mirror to see what happened in the last month, quarter or year. But since it can’t tell you what’s going to happen in the future, you’ll need to start with a business budget to help you look forward.

3. Total up your planned monthly revenue.

All a budget does is predict income and expenses so you’ll know where you’re at with profits. Just like how you start your personal budget with your income, you’ll start your business budget with business income (also called revenue). Your revenue is the money you earn in exchange for your products or services.

If your business has been making money for a while, use your P&L statements to look back and project what you’ll expect to make month over month. And if you’re just starting out, you’ll have to make an educated guess about what you think you’ll earn in the upcoming month.

4. Brainstorm all your projected expenses. 

It’s crazy how much money can slip through the cracks when we’re not careful about putting it in the budget. Think through  all your business expenses, down to the last paper clip. Here’s a list of common expenses to get you started:

• Cost of goods/inventory
• Equipment 
• Rent and utilities
• Phone and communication services
• Marketing and advertising costs 
• Office supplies, shipping and postage
• Subscriptions
• Maintenance and repairs
• Transportation expenses
• Payroll (this doesn’t include your paycheck—more on that later!)
• Employee benefits
• Acts of generosity to your team, customers and community

Related articles :  Product Launch: 10 Questions to Ask Before You Launch a New Product New Product Launch: Your 10-Step Checklist

5. Arrange your expenses by category.

Once you’ve got your big list of expenses, it helps to break it down into categories. Categorizing your budget will keep you from feeling overwhelmed by all those numbers.

One option is to group your expenses into these three categories:

• Fixed costs : These are the things you know you’ll need to pay for every month, like rent, insurance or subscriptions.
• Variable expenses : Some expenses change from month to month, like shipping costs or utilities. And there might also be seasonal expenses to consider—like more inventory purchases to gear up for the holidays.
• One-time purchases : One-off expenses will pop up now and then, for example, replacing equipment or attending a conference. Look ahead each month to see if you’ll need to set aside some extra money.

6. Calculate your gross profit. 

This is where we start to do some basic accounting. To put it simply, accounting is done to analyze income and expenses so that you know where your money went and whether you have a loss or profit. It’s your chance to look back at your spending to see if you hit the goals you set. So, using accounting can help you figure out exactly how much you’re spending and making in your business. (You could use simple Key Performance Indicators to help you track your goal progress.)

Now, number nerds and number haters alike—buckle in. We’re about to do some math! Take your  gross revenue  from Step 3   (the total amount of money you expect to make this month) and subtract the  cost of goods sold   to find your  gross profit.

What is the cost of goods sold, you ask? It’s the expenses directly related to producing your product or service. Let’s say you build and install cabinets. Your cost of goods sold would include the supplies (like wood, stain and hardware) and labor required for you to produce your products. Cost of goods sold does  not  include indirect costs—like rent or insurance or marketing expenses. You’ll tackle those with operating expenses.

So here’s where we are so far:

     Gross Revenue

— Cost of Goods Sold

________________

    Gross Profit

7. Find your net profit. 

Now you’re ready to find your net profit—or what’s referred to as the  bottom line . Total up the rest of your upcoming expenses for the month and subtract that number from your gross profit to find your net profit.

     Gross Profit

— Operating Expenses

_______________

     Net Profit

Your net profit is the money your business actually makes at the end of the month. You can think of your net profit like a report card: It helps you measure the success of your business.

But you can’t pocket that profit just yet. You’ve got a few more steps to take. 

8. Divide your net profit. 

In this step, you’re going divide your net profit into multiple buckets:

The IRS is standing by to “help” you meet your tax obligation, so be ready! If you don’t keep an eye on your taxes, your business will fail. How much you’ll owe depends on how much you make, but a good rule of thumb is to set aside 25% of your net profit for taxes. You might even want to create a separate bank account to stash your tax money just to make sure you don’t overspend. And if you haven’t already, consider meeting with a tax professional to create a specific plan for your business.

Pro tip: When you collect sales tax, don’t spend it. You’ll find yourself in real trouble if you do.

Emergency fund:

An emergency fund is essential for running a successful business. Think of this as a buffer between you and life. Whether your business laptop fries, your delivery van dies, or a vacuum cleaner nicks and short wires your copier cable, your emergency fund is there for you. Save the equivalent of three to six months of operating expenses for your emergency fund. To do this, you’ll have to start saving (and we mean really save) as soon as you can.

Upcoming expenses/reinvestment:

This is another chunk of savings but with a more specific purpose. If you know you’ve got a bigger out-of-the-ordinary expense coming up (like hiring a contractor or investing in new equipment), set aside money in the months leading up to that purchase.Also, the way to grow your company without debt is by designating some of your cash for future growth. This savings could go toward launching a new product, taking a calculated growth risk, or jumping on a deal that pops up out of the blue.

Finally! Whatever’s left is yours. As the business owner, you’re the last to get paid. If you’re making bank, congratulations! Enjoy your hard-earned money. But if things are tight right now (as they usually are in the early stages of a business), hang in there. If you keep following these budgeting principles and growing your profit, you’ll start to see the rewards.

Now for some real fun. One of the most amazing perks of running a profitable business isn’t getting but giving! Be generous with your products, services and profits along the way. Constantly live out a spirit of generosity and encourage it in your team. That’s the hallmark of people who live successful lives and who operate business with soul.

Pro tip : No matter who you want to impress or how much you think you can justify buying new toys (for your business and otherwise), hold off until you’re consistently making lots of money and having plenty of margin. Buying shiny objects and tempting gizmos and gadgets you don’t really need can wreck your momentum.

9. Review your budget consistently. 

It’s one thing to make a plan and another thing to stick to it . After you’ve set your budget for the month, have daily or weekly check-ins to make sure you’re actually following it. At the end of the month, go back and see if you went over in one category or didn’t spend as much as you thought in another. You can adjust those numbers in next month’s budget!

10. Don’t give up. 

When you’re new to budgeting, it can be frustrating when you mess up, guess wrong or just blow it altogether. But don’t give up. You’ll need a few months to get the kinks worked out. So keep trying, keep budgeting, and keep coming back to it. Before you know it, telling your money where to go will build your confidence and help you make business decisions that keep you on mission!

What’s Next

Remember: It’s okay if you’re a little intimidated by accounting and making a budget for business. But it’s not okay to avoid the financial details that will make or break you. So take your next step in budgeting by applying the basics we just covered.

Looking for a playbook that’ll walk you through all things business related—including budgeting for business and developing as a leader? Check out EntreLeadership . In this book, #1 New York Times bestselling author Dave Ramsey walks you through everything you ever wanted to know about how to develop as a leader and build your business.

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Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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What Is a Budget?

What is a budget? You’ve probably heard about budgeting. But why do people do it? And why do you need to do it? We took a deep dive into the world of budgeting, and here’s what we found.

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What Is a Business Budget?

Definition & Examples of a Business Budget

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

How a Business Budget Works

Do i need a business budget, example of a business budget template.

A business budget estimates an organization's revenue and expenses over a specific period of time.

Learn more about how a business budget works and get an example of one.

A business budget provides an accurate picture of expenditures and revenues and should drive important business decisions such as whether to increase marketing, cut expenses, hire staff, purchase equipment, and improve efficiencies in other ways. It also outlines your organization's financial and operational goals, so it may be thought of as an action plan that helps you allocate resources, evaluate performances, and formulate plans.

The basic process of planning a budget involves listing your business's fixed and variable costs on a monthly basis and then deciding on the allocation of funds to reflect goals.

Businesses often use special types of budgets to assess specific areas of operation. A cash flow budget, for example, projects your business's cash inflows and outflows over a certain period of time. Its main use is to predict your business's ability to take in more cash than it pays out.

Most businesses have fixed costs that are independent of sales revenue, such as:

• Building or office eases or mortgage costs 
• Loan payments (if using debt financing )
• Vehicle leases (or loan payments if the vehicle is purchased)
• Equipment (machinery, tools, computers, etc.)
• Payroll (if employees are on salary)
• Utilities such as landline phone and internet charges 

Variable costs increase or decrease according to the level of business activity. Examples include:

• Contractors ' wages or commissions (for salespeople)
• Utilities such as electricity, gas, or water that increase with activity 
• Raw materials
• Shipping and delivery costs
• Advertising (can be fixed or variable)
• Maintenance and repair of equipment

It is important to be realistic with your budget projections. If in doubt, be conservative and overestimate your expenses and underestimate your revenues. It is particularly difficult if you are starting a new business and have no previous year's budget figures to guide your estimates. In this case, it is typically much easier to estimate expenses than revenues.

As the budget year progresses the estimates should be updated monthly with actual figures, enabling you to check the accuracy of your forecasts. Note that there often are radical differences between actual and projected revenues and expenses due to unforeseen business circumstances and/or changing business and economic cycles, such as:

• Gaining or losing a major client
• Having to purchase or replace expensive equipment
• An increase in rent
• Hiring employees
• An increase in competition
• Changes in the tax code

If you own a business, then you need a budget.

A budget is an essential part of a  business plan and is necessary for starting a new business . It plays an important role in determining your start-up and operating costs. Once your business is established, budgeting becomes a regular task that normally occurs on a quarterly or annual basis.

Without a budget, you may not know how your business is performing.

Having a comprehensive budget is a requirement for obtaining business loans from financial institutions or seeking equity funding from investors .

A simple business budget template includes expenses common to most small businesses. You can use and modify a template as required to suit your own business, filling out your own information where applicable. Your completed budget might look something like this:

Many budgets also include actual figures going back several quarters or years as a comparison for what is being projected for the upcoming quarter or year. Most accounting software has options for budgeting/forecasting.

Key Takeaways

• A business budget estimates an organization's revenue and expenses over a specific period of time and drives important business decisions. 
• Businesses often use special types of budgets to assess specific areas of operation. 
• Budgets help companies understand start-up and operating costs and track performance.
• Most budgets include fixed and variable income and expenses.

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Business Budget Template

Having a business budget is essential for any size business. A business budget helps you decide whether you can grow your business, give yourself a raise, purchase additional inventory and assets, and whether you may be able to avoid bankruptcy.

It's possible to modify a personal budget spreadsheet to apply to a business, but if you are using our Income Statement Template , you'll want to use the business budget spreadsheet so that you can create a budget that is parallel to your income statement.

For those who are just starting a business, or thinking of starting a business, you might be interested in the free Business Start Up Costs template. A startup cost analysis is an important part of a good business plan and can help you get things off the ground before you begin using a more detailed business budget.

License : Private Use (not for distribution or resale)

"No installation, no macros - just a simple spreadsheet" - by Jon Wittwer

Description

This spreadsheet contains two sample business budgets designed for companies providing services or selling products.

Service Providers : The Services worksheet is a simple business budget that separates income and business expenses into categories that closely match those used in an income statement. The categories are fairly comprehensive, but it is also easy to add, remove, and modify the categories.

Retailers, Manufacturers, Publishers : The Goods worksheet includes the categories in the Services worksheet, but also has a Cost of Goods Sold section for recording inventory and purchases and calculating Gross Profit.

12-Month Business Budget

This worksheet is a variant of the above business budget, with sales and business expenses broken down by month . This is helpful for budgeting quarterly expenses and other business expenses that occur at specific times of the year.

The Goods worksheet lets you record sales and cost of goods sold for multiple products .

Business Budget for Multiple Products

This version allows you to perform a detailed analysis of your business expenses and cost of goods sold (COGS) if you are selling multiple products. Columns are also included for calculating the Percentage of Total Sales for each product and the various expenses.

Using the Business Budget Spreadsheet

These business budget templates are pretty simple to modify and customize. However, here are some things you should know and keep in mind as you use these templates:

Double-Check the Formulas

If you add or move categories around, make sure to double-check the calculations, especially the SUM() formulas that calculate the totals and subtotals, to make sure that the right cells are summed.

Conditional Formatting for red Values

The Difference is calculated as Actual - Budget. Conditional formatting is used to highlight the Difference red if income is less than the budget amount or if business expenses are more than the budget. In other words, a red value means you ought to take a closer look at it.

Analyzing Cost of Goods Sold

The costs associated with producing and purchasing goods are variable costs that increase or decrease with the volume of production and sales, such as wages for direct labor required to produce the goods, packaging, inventory purchases, shipping, and commissions. These costs are usually compared to the total sales. A careful study of these costs can help you determine pricing for your products, which products are more profitable, etc.

Multiple Products

The Goods spreadsheet is set up initially to record total net sales for each quarter. If you want to perform a more detailed analysis for multiple products, you can insert additional rows and separate the sales and costs according to product, or you can use the bonus spreadsheet that is designed for performing a detailed analysis for multiple products.

Income Taxes

A separate section under business expenses calculates the Net Income Before Taxes by subtracting the Total Expenses from Total Income. This helps you make a simple estimate of the income taxes, assuming all the Expenses are tax deductible. If you have any taxable expenses make sure to subtract those values from the Net Income Before Taxes before estimating your income tax budget.

Budgeting Large Non-Recurring Expenses

One of the reasons for budgeting is of course to help you determine whether you will be able to afford upgrades, new construction, asset purchases, etc. However, this budget spreadsheet is mainly for comparing your operating income and expenses to make sure that in your normal business activities you are earning more than you are spending. You would typically look at your Net Income to determine whether you will be able to expand your business, make large asset purchases, etc.

More Business Budgeting Resources

• Small Business Budgeting Tips and Techniques at investopedia.com
• Drafting Your Budget at entrepreneur.com

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Financial Statements

Top Excel Budget Templates

We’ve provided you with the best free budget template selection around, whether you’re managing a personal budget, an industry-specific budget, or balancing a household budget. additionally, we’ve provided details on how to choose the right budget for your use case, and steps on how to create one..

Business Budget

Track and manage your business expenses so you can make the best strategic decisions for your company with this business budget template. Gain visibility into where you’re overspending, where you need to cutback, and the general health of your company.

Download the Business Budget Excel Template

View your budget and expenses in real time so you can make the most informed decisions, track income against expense, and ensure no item goes unseen in savings, spending, or debt repayment goals.

Track Your Business Budget in Smartsheet

Department Budget

Estimate your department expenses for the upcoming fiscal year, track spend against savings, and compare year-over-year budget numbers by percent changes with this template designed for teams and departments.

Download the Department Budget Excel Template

Manage Your Department Budgets with Smartsheet

Project Budget

Using this template will help you stay on top of your project budget. Track the material, labor, and fixed costs associated with each project task, and monitor the variance between your actual and budgeted amounts.

Download the Project Budget Excel Template

Manage Your Project Budget in Smartsheet

Home Construction Budget

Keep an eye on all construction-related expenses, including remodeling, planned improvements, emergency repairs, and labor and material budgets, and monitor the running balance.

Download the Construction Budget Excel Template

Manage Your Construction Budget in Smartsheet

Business Budget Management Template Set 

This set of templates in Smartsheet helps track monthly actuals against budget goals so you can tightly manage your financial performance and ensure your business stay on track.

Track monthly actuals against budget goals by department

Receive automated budget and spend approval requests

See a real-time dashboard view of financial health

Simple Budget

List your income and expenses, calculate spend and savings totals, and view which portion of income is going to which category of expenses to stay on top of your budget and ensure you don’t go over.

Download Excel Template

Personal Budget

Document, track, and manage your personal income, expenses, and savings to ensure you’re moving towards your financial goals. Improve visibility into how well you save your money so you can reach your goals faster.

Household Expenses Monthly Budget

Track, manage, and organize expenses for an entire household on a month-to-month basis, create line items for recurring expenses, and boost savings so you can reach your financial goals faster.

Weekly Budget Planner

Track your income and expenses on a weekly or bi-weekly basis to gain better insight into where you’re spending the most money and identify areas where you can save. Add additional columns and update your spending goals as time goes on.

Money Manager

Track expenses and manage your budget in one location with this money manager template. With a yearly budget, a monthly budget report, and a transaction history log, you will have one comprehensive budgeting solution in one location to track expenses and income appropriately.

Zero-Based Budget

Allocate every dollar of your income to a piece of your budget to better track where your money is going and ensure the difference between your monthly income and expenses equal zero. Document both incoming money and outgoing expenses and adjust allocations accordingly.

GLBL Budget

Manage your budget every paycheck and ensure you’re allocating every dollar of income toward an outgo, resulting in a zero balance. Reduce the possibility of overspending by tracking transactions and assessing incoming and outgoing money on a regular basis.

College Budget

Create a budget to help you save money, balance expenses, and manage student loan payments while you’re in college. Track all income and expenses on a quarterly basis and estimate monthly college expense totals to ensure you are always on top of your money.

Academic Club Budget

Track fundraising efforts, document sponsorship amounts, and manage expenses to ensure the operations and strategies of your academic club run smoothly with this comprehensive template. Gain insight into budget versus actual balances and better manage club revenue.

Wedding Budget

Plan how much money you need to save for your wedding, surface all applicable expenses, estimate overall costs, and establish a baseline spend goal. As you start planning, track actual spend amounts to determine the variance to budget to ensure you remain within the bounds of your ideal spending goal.

Early Retirement Budget

Ensure that you’re saving enough money to live comfortably in retirement by creating a comprehensive plan, estimating your daily needs and expenses, and documenting how you will allocate your income. Gain insight into your income and expenses and estimate your budget with inflation factored in to make sure you’re covering all your bases.

Holiday Shopping Budget

To prepare for the holidays, list all gifts to purchase for whom, document how much each will cost, and compare that against a monthly or yearly budget to ensure you have visibility into how much money you are spending during the hectic holiday months.

Finding the right template can help you get started planning your budget, but you should also look for a solution to ensure your finance operations are as efficient as possible. Consider a tool that provides one location for your team to track and manage financial details, from anywhere, in real time.

Smartsheet is an enterprise work execution platform that is fundamentally changing the way businesses and teams work. Use Smartsheet to boost visibility into your finance operations. Make real-time updates and share details with key stakeholders to increase transparency and accountability. Ensure that everyone is working with the most up-to-date information, so that no detail is missed and you are able to make the right decisions at the right time.

The Importance of a Personal Budget

Creating a personal budget is not only important for your financial well-being and peace-of-mind, but also for your short and long-term goals. Taking control of your finances with a personal budget template will help you make headway on these goals. 

To get started, you want to consider the following steps to help you establish your personal budget:

• Set your goals. Take some time to make a list of your short and long-term goals. Determine why each goal is a priority, how you plan to achieve them, and the timeframe in which you would like to accomplish them. Short-term goals should only take a year to accomplish and would include items like paying off a credit card. Your long-term goals could take many years to accomplish, with examples of long-term goals including saving for your child’s education or your own retirement.
• Track your spending. To make accurate estimates of how much you should allocate to each expense within your personal budget, you will need a sense of how much you are currently spending in each area. Review your bank statements for the last three to four months to get an idea of your spending. Of course, you may decide to change the amount you budget for each item, but this will at least provide a baseline to go off of.
• Personalize your budget. Using a personal budget template is helpful to get your budget started, though you can always personalize your budget to match your specific needs. Additionally, just because you create a budget one month, doesn’t mean your expenses and goals will be the same for the next. Be sure to have monthly check-ins on your budget and don’t hesitate to update it as your circumstances change.

Getting Started With a Personal Budget Template in Excel

Now that you’ve made a list of your goals and started tracking your expenses, you can begin creating your actual budget using a personal budget template. 

Begin by downloading the personal budget template, and inputting your income, savings goals, and expense amounts for the first month. This template is made up of two sheets, one for your budget breakdown and the second is your dashboard.   

Within the first sheet, you will find three sections, including income, savings and expenses. The categories of the income section are:

• Salary/Wages
• Interest Income
• Refunds/Reimbursements

The next section is where you will input your savings goals. These goals may include both your short-term and long-term savings goals that you listed earlier. This section includes the following categories, but can be changed to fit your goals:

• Emergency Fund
• Transfer to Savings
• Retirement (401K, IRA)
• Investments

The last section of the personal budget sheet is for expenses. This section has various primary categories, with multiple sub-categories associated. The primary expense categories include:

• Transportation
• Daily Living
• Entertainment
• Vacation/Holiday

Once you have input the individual amounts for each of the income, savings, and expense categories, you will see that the total for each month is calculated at the bottom of each column. Additionally, totals are calculated at the end of each row, representing your year-to-date total for each budget item, category and section. 

On the second sheet you will find your budget dashboards. Dashboards are helpful to provide a quick visual into the summary and health of your budget, and will automatically update as you make changes to your personal budget sheet. The dashboard sheet included in this personal budget template has the following four distributions:

• Potential to Save Summary  This summary calculates your potential savings, on a monthly basis, after you have met your current savings goals for the expenses incurred. The potential to save amount is calculated by subtracting the Total Savings and Total Expense amounts from Total Income.

• Income to Expenses Chart  The bar chart provides a quick look at the difference between your total income and expenses on a monthly basis, which is helpful to provide a high-level view of the health of your budget.  

• Income-Expense-Savings Pie  This pie chart is helpful to determine the breakdown of your budget, providing a visual of what proportion of your budget goes to income, savings, and expenses.

Use a pre-built Smartsheet template to create a budget in minutes.

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How to Prepare a Budget for an Organization: 4 Steps

• 16 Nov 2021

An organization’s budget dictates how it leverages capital to work toward goals. For this reason, the ability to prepare a budget is one of the most crucial skills for any business leader —whether a current or aspiring entrepreneur, executive, functional lead, or manager.

Before preparing your first organizational budget, it’s important to understand what goes into a budget and the key steps involved in creating one.

What Is a Budget?

A budget is a document businesses use to track income and expenses in a detailed enough way to make operational decisions.

Budgets are typically forward-looking in nature. Income is based on projections and estimates for the periods they cover, as are expenses. For this reason, organizations often create both short- (monthly or quarterly) and long-term (annual) budgets, where the short-term budget is regularly adjusted to ensure the long-term budget stays on track.

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Most organizations also prepare what’s known as an “actual budget” or “actual report” to compare estimates against reality following the period covered by the budget. This allows an organization to understand where it went wrong in the budgeting process and adjust estimates moving forward.

Budget vs. Cash Flow Statement

If the definition above sounds similar to a cash flow statement , you’re right: Your organization’s budget and cash flow statement are similar in that they both monitor the flow of money into and out of your business. Yet, they differ in key ways.

First, a budget typically offers more granular details about how money is spent than a cash flow statement does. This provides greater context for making tactical business decisions, such as considering where to trim business expenses.

Related: The Beginner’s Guide to Reading & Understanding Financial Statements

Second, a budget is, quite literally, a tool used to direct work done within an organization. The cash flow statement plays a different role by offering a higher-level overview of how money moves into, throughout, and out of an organization.

Instead of thinking of the two documents as competing, view them as complementary, with each playing a role in driving your business’s performance.

Steps to Prepare a Budget for Your Organization

The steps below can be followed whether creating a budget for a project, initiative, department, or entire organization.

1. Understand Your Organization’s Goals

Before you compile your budget, it’s important to have a firm understanding of the goals your organization is working toward in the period covered by it. By understanding those goals, you can prepare a budget that aligns with and facilitates them.

Related: The Advantages of Data-Driven Decision-Making

For example, consider a business that regularly experiences year-over-year revenue growth that’s offset by rising expenses. That organization might benefit from focusing efforts on better controlling expenses during the budgeting process.

Alternatively, consider a company launching a new product or service. The company may invest more heavily in the fledgling business line to grow it. With this goal, the company may need to trim expenses or growth initiatives elsewhere in its budget.

2. Estimate Your Income for the Period Covered by the Budget

To allocate funds for business expenses, you first need to determine your income and cash flow for the period to the best of your ability.

Depending on the nature of your organization, this can be a simple or complicated process. For example, a business that sells products or services to known clients locked in with contracts will likely have an easier time estimating income than a business that depends on active sales activity. In the second case, it would be important to reference historical sales and marketing data to understand whether the market is changing in a way that might cause you to miss or exceed historical trends.

Related: How to Read & Understand an Income Statement

Beyond income from sales activity, you should include other income sources, such as returns on investments, asset sales, and bond or share offerings.

3. Identify Your Expenses

Once you understand your projected income for the period, you need to estimate your expenses. This process involves three main categories: fixed costs, variable expenses, and one-time expenses.

Fixed costs are any expenses that remain constant over time and don’t dramatically vary from week to week or month to month. In many cases, those expenses are locked in by some form of contract, making it easy to anticipate and account for them. This category usually includes expenses related to overhead, such as rent payments and utilities. Phone, data, and software subscriptions can also fall into this category, along with debt payments. Any expense that’s regular and expected should be included.

Related: 6 Budgeting Tips for Managers

Variable expenses are those your business incurs, which vary over time depending on several factors, including sales activities. Your shipping and distribution costs, for example, are likely to be higher during a period when you sell more product than one when you sell less product. Likewise, utilities such as water, gas, and electricity will be higher during periods of increased use. This is especially true for businesses that manufacture their own products. Sales commissions, materials costs, and labor costs are other examples of variable expenses.

Both fixed expenses and variable expenses are recurring in nature, making it easy to account for them (even if variable expenses must be projected). One-time expenses , also called “one-time spends,” don’t recur and happen more rarely. Purchasing equipment or facilities, developing a new product or service, hiring a consultant, and handling a security breach are all examples of one-time expenses. Understanding major initiatives—and what it will take to accomplish them—and what you’ve spent in previous years on similar expenses can help account for them in your budget, even if you’re unsure of their exact values.

4. Determine Your Budget Surplus or Deficit

After you’ve accounted for all your income and expenses, you can apply them to your budget. This is where you determine whether you have enough projected income to cover all your expenses.

If you have more than enough income to cover your expenses, you have a budget surplus. Knowing this, you should determine how to use additional funds best. You may, for example, move the money into a rainy day fund you can access should your actual income fall short of projections. Alternatively, you may deploy the funds to grow your business.

On the other hand, if your expenses exceed your income, you have a budget deficit. At this point, you must identify the best path forward to close the gap. Can you bring in additional funds by selling more aggressively? Can you lower your fixed or variable expenses? Would you consider selling bonds or shares of company stock to infuse the business with additional capital?

An Important Financial Statement

The person responsible for generating a budget varies depending on an organization’s nature and its budgetary goals. An entrepreneur or small business owner, for example, is likely to prepare an organizational budget on their own. Meanwhile, a larger organization may rely on a member of the accounting department to generate a budget for the entire business. Individual department heads or functional leads might also be called on to submit budget proposals for their teams.

With this in mind, anyone who aspires to start their own business or move into an organizational leadership position can benefit from learning how to prepare a budget.

Do you want to take your career to the next level? Consider enrolling in our eight-week Financial Accounting course or three-course Credential of Readiness (CORe) program to learn financial concepts that can enable you to unlock critical insights into business performance and potential. Not sure which course is right for you? Download our free flowchart .

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Business Plan Budget Example: Everything You Need to Know

A business plan budget example is smart to have when managing a company. 3 min read

A business plan budget example is smart to have when managing a company. It sets the outline for how much money you'll spend in your business and what you'll spend it on. This isn't a forecast, however, which is where you predict the future of your budget. A budget is the assumed plan for the future's outcome.

Is Budget and Business Planning Required for Small Businesses?

New owners of small businesses can run their company in a way that's more relaxed and not find it necessary to set a budget. However, it is a smart idea to have a plan for the future of your business and fund those plans. The best way to control your money is by budgeting, which lets you invest in any potential new business opportunities when it's appropriate. If you find your company grows, you won't always be able to interact with it as much and be hands-on with the daily operations.

You might need to split the budget up into different sections such as production, sales, and marketing. It's common for money to begin in a variety of directions through the organization. Budgets are an essential tool to help you control how much you're spending.

Benefits of Business Budget Planning

There are many benefits to creating a business budget . These include being better at the following:

• Planning for the future.
• Improving decision-making.
• Monitoring performance.
• Effectively managing money.
• Giving out the right resources to projects.
• Meeting your objectives.
• Solving problems before they become bigger.
• Increasing staff motivation.

How to Draft a Business Budget Plan

The key to having success in a business is to form, monitor, and manage your budget. This will help you designate resources where you need them so your company stays successful and profitable. The process doesn't necessarily need to be complicated, as you'll just need to figure out how much you think you'll earn and make in your budget period. You can start by asking yourself what the project sales might be for your budget period. It's better to be realistic and not overestimate, as this will cause issues in the future.

You'll also need to think about any direct costs of sales. This includes the costs of materials, subcontractors, and components to make your product or supply your service. The overhead costs or fixed costs also need to be included in the business budget. You can break these down by the cost of the premises, which include municipal taxes, monthly rent, and service charges. The staff costs also need to be taken into consideration, which includes benefits, wages, insurance, and pension plans.

Utilities are another expense to budget for , which include lighting, heating, and telephone costs. If you'll be printing or shipping anything, you'll have to factor in costs for postage, stationery, and printing. There may be costs for promotion, advertising, vehicles, equipment, and subsistence and travel expenses. The exact expenses your company will have will vary, and it's best to budget for each department. Make sure to include how much you'll pay yourself and a tax allowance. There are many costs to consider that you probably haven't thought about, which is why creating a business plan for your budget is important.

Once you have an estimate of how much you'll make and how much you'll spend, you'll be able to figure out exactly how much profit you're making. This lets you look at the budget you just made and see where costs can be cut. If you think you'll have problems with cash flow, you may need to rethink the budget and cut out entire departments.

Once you've created this budget, it's important to stick it as closely as possible. You should review it on a continuous basis and revise it if you need to, however. Many businesses have a rolling budget so they're constantly budgeting for the next year.

It's crucial to be realistic when it comes to your budget projects. If you're unsure if they're accurate, it 's better to be conservative and underestimate the revenue while overestimating the expenses. This can be hard if you're just starting a company, as you may not know exactly how much you'll need to spend on items and services.

If you need help with a business plan budget example, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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• Bottom Up Budgeting Definition
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• How to Start a Business: A Comprehensive Guide for Entrepreneurs
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• Actual Cost

How to Create a Small Business Budget: A Simple Step-by-Step Guide

• A simple step-by-step process for creating a business budget
• The intimate details of your budget to understand how it works
• Free small business budget apps and templates to get started
• An example of a small business budget that you can copy
• Quick answers to your questions about your business budget

Can you think of going on an exotic voyage without having a travel itinerary or budget? Most likely, not.

The same applies to your small business. Large corporations and small businesses use budgets to plan how to use the lifeblood of any company — money. To keep it going, you need strategic planning in managing its finances.

As a small business owner, you might find it intimidating to make a budget when you’re already sailing the ship with tons of responsibilities. But that doesn’t change the fact that budgeting is an important process that you can’t afford to skip in running a successful business.

One of the biggest reasons why most small businesses fail in their early years is not having a proper business plan and not enough financing. A well-planned small business budget is one way to save your business from crashing.

In this step-by-step guide to creating your small business budget, we'll walk through how to create a budget in order to give your business a better chance to survive and grow.

What is a Small Business Budget?

A business budget is a plan of action for how your business revenue will be spent. It is a forward-looking financial plan that every business must have.

The concept of budgeting is all about identifying your available resources, estimating your expenses, and planning ahead. It is one of the first and most important building blocks of your business action plan.

The concept of budgeting is all about identifying your available resources, estimating your expenses, and planning ahead.

A small business budget is an alternative to capital budgeting adopted by large corporations. You can think of a business budget as a snapshot of your future expenses and revenues that will help you make important strategic decisions about your business.

A well-crafted budget helps a business take many decisions like increasing or decreasing marketing and HR costs, leveraging new opportunities, purchasing equipment, etc.

Why is a Budget Essential for the Success of Your Small Business?

Before we get into how to create a small business budget, it is important to answer why a business needs a budget.

1. Helps manage business cash flows

Building a small business budget does not only help to make informed decisions about the business, it also helps in managing the cash flows.

The importance of budgeting cannot be undermined as 82% of small businesses fail because of poor cash flow. Cash flow problems are the #1 reason for small business failure. And what’s the solution?

A viable budget for a small business is one of the solutions. When you’re running your business, there are a lot of unexpected events, financing needs, and growth prospects. If you do not have a plan for taking action, there is a chance it will lead to irreversible cash flow problems.

2. Credit problems

Not having a budget can also raise credit problems for your small business. When you do not know your estimated expenses, you have no idea when and where to invest your money.  For instance, you’ve taken a business loan out to fund your business. How can you tell where to invest it when you don’t have a carefully crafted budget for each dime of that loan?

As a result, you misspend and under-utilize the credit in unimportant activities — like paying the bills which has no return compared to money spent on marketing campaigns. If you have a budget, you can improve your credit utilization ratio as well as have impressive ROI on your credit investments.

3. Every penny gets a job

Misallocation of resources is a plague that is equally harmful to small businesses and large corporations. Resource allocation helps a business to get a clear picture of work that has been done and work that needs to be done. Knowing how to build a small business budget and sticking to it also helps proper resource allocation.

If HR needed $5000 last year for staffing and recruiting, it does not mean that the same amount should be allocated next year. In zero-based budgeting, the budget resources are allocated on a need basis. It is possible that this year marketing and advertising needs higher amounts. And you can know this only if you have a budget prepared ahead of allocation.

4. You don’t have to wait for leveraging investment opportunities

As one of the biggest reasons why businesses fail in the initial years is not having enough financing, it means that they do not have funds to invest when the right opportunities present themselves.

As a result, they cannot leverage the business growth opportunities necessary for a business breakthrough.

However, when a small business has planned everything and kept a budget to invest in new opportunities, it can grow without burdening the business with loans.

5. Informed decision making

The role of the budget as a managerial decision-making tool is unquestionable. When a business has a prepared budget for the future, it has a foundation to compare its performance .

When a business has a prepared budget for the future, it has a foundation to compare its performance.

At the end of every year, the financials from profit & loss statements are compared with estimations defined in last year's budget. It helps the business owner to identify the differences in planned and actual figures to help in future decision-making.

Take an example of a small business that prepared a business budget and found the income can support the investment of $20,000 in marketing. The marketing person thinks that a new media campaign worth $30,000 is a fantastic growth accelerator.

But you will already know how much your small business can spend on marketing. That way you won’t overspend and instead use $20,000 for other marketing efforts.

Now, let’s get into a simple process for creating your own budget.

Step-by-Step Guide to Create Your Small Business Budget

Before we get into the steps of making a budget, it is important to know that a realistic budget is a goal, not just a sum of unrealistic calculations . Your business budget must be

• simple to understand
• based on logical facts, and
• useful for business operations.

1. Estimate your revenues

The first thing you’ll do in your budgeting process is gathering all your business’s income sources. Consolidate them to have an estimate of total revenues for the next financial period.

Either do it as monthly estimates and a final consolidation at the year-end. Or you can go with an annual estimation depending on your business model.

Some examples of your income sources can be:

• Income from business operations
• From investment in securities
• Income from consultation services

It is not necessary to have multiple streams of income. It solely depends on the type of business you’re in.

2. Sum up your fixed costs

Once you’ve logged all income from different sources, estimate your fixed costs. Fixed costs are the business costs that remain the same regardless of how much sales you’ve made.

For instance, if you’ve rented a building for your business, the rent expense will remain fixed irrespective of if you’re making sales or not.

Fixed costs are important to manage because this is an opportunity for you to minimize your fixed costs by proper planning. Other fixed costs could include payrolls, utility bills, etc. Sum all your fixed costs because they’ll be present irrespective of your sales and variable costs.

3. Estimate your variable costs

Moving forward, you’ll estimate the second part of your business costs: variable expenses. Variable expenses, as the name suggests, vary with the level of sales or revenues.

For instance, in a manufacturing business, raw material is a variable cost. They will only purchase raw materials when manufacturing is done. The use of material also varies according to the number of units produced and sold.

The variable costs of your business might vary from month to month or every year. Usage-based utilities, shipping costs of orders, etc., are common variable expenses most businesses incur.

A great thing about many variable costs is that they can be negotiated with suppliers. So why not leverage this opportunity? That’s what you’ll do in the next step.

4. Get quotes from suppliers and negotiate

After having your own estimation of variable costs, start getting quotes from the suppliers. Check different suppliers for the services you need. Compare the quotes of different suppliers and then try to negotiate with ones you consider fit for your business.

Chances are higher that you’ll have successful negotiations and, as a result, lower variable costs per unit.

5. Reconcile variable costs estimates

Now when you’ve got quotes from the suppliers, reconcile the estimates. It will make the picture clear about what to expect from your budget in the future.

6. Prepare a profit and loss statement

If you’re not new to the business, you will have a profit and loss statement from the last financial year. Taking the profit & loss from last year as a base, prepare one for the future based on your estimates.

You’ll get profit estimates by doing this. Why is it important to get an estimation of profit?

These estimates will help you plan how much money you have to reinvest into the business.

7. Project net cash flows

Cash flows are of two types: inflows and outflows. The net cash flow of a business is a difference between inflows and outflows. So far, you’ve prepared the estimations of revenues, expenses, and estimated profit for your business. You can also project how much cash you will retain during the next financial year.

The positive cash flow signifies excess cash and negative cash flows show cash shortage. Estimating your cash flows is important in creating a small business budget because cash is the lifeblood of every business.

8. Allocate an amount to each department

After estimations, it’s time to allocate a budget to each department based on the estimated values.

For instance, you had estimated marketing expenses will be $15,000, and your revenue estimates are $500,000. If we follow the percentage method, the marketing budget will be allocated as 7.5% of the revenue.

Follow a similar process for each department and expense for allocation of budget. The small business budget percentages need to be accurate as they will dictate future operations.

9. Set aside funds for contingencies specific to your industry

You cannot afford to let problems meet you unprepared in business, no matter how quick you are at thinking on your feet.

Plan for what is difficult while it is easy, do what is great while it is small. Sun Tzu, The Art of War

Therefore, analyze your industry and any seasonal requirements to maintain a contingency fund for unexpected events.

Besides the unexpected expenses, you need contingency planning for any probable expenses that might occur in the future. For instance, you might have a lawsuit pending a decision. So you’ll maintain a fund on the off chance that you lose the lawsuit.

10. Develop the draft

Bravo! You’ve done most of the work.

Now it’s time to consolidate all the estimations into a budget draft. The estimated P & L and cash flow statements will give you a pretty good idea of the amount you’ll have to play with.

11. Get it approved

Share the budget draft with your team and ask for feedback. After feedback, address any reservations from a team member or reconcile the draft for any changes suggested by team members. Get the final budget approved and implement it in the future.

At the end of the financial year, compare the actual values with estimates and take corrective actions for the future.

Get the Picture: Sample Small Business Budget

Let’s check out an example of a small business budget. We will follow all the steps in making the budget as discussed above to have a consolidated budget at the end.You can also start with these free small business budget templates for Excel or Google Sheets. To use with Google Sheets, download the template, send it to your Google Drive and open it with Google Sheets.

Revenues Estimation (Monthly)

Expenses (Fixed)

Expenses (Variable Costs)

P & L (Monthly Profit & Loss Statement)

It is based on the estimation that there will be no credit purchase or credit sales. Therefore, the cash flow will equal the net profit. However, it can be different depending on the business policy of credit sales and purchases, as well as collections.

Estimated Inflows = $15,500

Estimated Outflows = $4310 + $3250 = $7560

Net Cash flow from operating activities = Inflows – Outflows

Net Cash flow from operating activities = $15,500 – $7560

Net Cash flow from operating activities = $7940

This example can be treated as a small business budget sample when you’re preparing your business budget.

Free Budget Templates to Use for Your Business

We’ve collected some best budget templates that you can use as a small business budget example or a template itself. The templates can serve as a small business budget tool that is convenient and reusable in the future.

Small business budget template for Excel

If you’re an Excel user, you have a lot of choices for budget templates. However, choosing one that caters to your business needs and is simple to understand is quite a job.

Here is a small business budget template for excel that you can play around with. The template has everything sorted with automatic calculations of variances for expenses and income. You can also perform different analyzes on your financial data.

If you’re someone who isn’t comfortable working with macros, this budget template breaks down all expenses, revenues, variances, etc. You will not have to worry about macros within the budget on a monthly and annual basis.

Small business budget template for Google Sheets

Not an Excel person? Try this template on Google Sheets. If you need more downloadable options, check here .

PDFConverter.com budget templates

There is an assortment of 15 small business budget planners by PDFConverter.com that you can use as well. You can choose a template according to your business type, needs, etc. Either you’re looking for a marketing budget or budget planner to apply for a loan, you can get a template for it.

Free and Open Source Small Business Budget Software

More businesses are shifting to accounting software for making budgets, tracking expenses, recording revenues, and doing financial analysis. The percentage of businesses relying on budget software has grown to 43% in the US alone .  You can also switch to automated budgeting by choosing from different small business budget software for free. Many small business budget apps let you create and track your budget on a monthly and annual basis.

Here are some free and open source small business budgets you can try.

Buddi is a personal free finance software as well as open-source. You can play around with the software and switch to any language from the multiple language choices available. The software can run smoothly on most operating systems, including Windows, Linus, Macintosh OS, etc.

You have the freedom to export, import, or synchronize data with the software for smooth working and reporting. Buddi can be used for personal budgeting, small business budgeting, and the budgeting of large corporations.

MoneyManagerEX

MoneyManagerEX is also free and open-source software. You can easily collaborate and share your financial data with team members to give feedback, make changes, or suggest reconciliations. It is perfect for managing your small business budget, including bookkeeping, collections and reimbursements, and capital management.

In short, it is an all-in-one software that will cover all finance-related requirements of your business in addition to budgeting. You can work on the web-based or desktop version. 

The desktop version is more stable though. You can also choose your native language for the interface and translate the reports in any language from 8 available choices.

Divvy is yet another software developed for savvy entrepreneurs who want to do budgeting with freedom. Divvy is not too old in the market, but the features it offers are impressive. You can use the software with Mac OS, Windows 10, Web Browser, G Suite, etc.

Besides the web-based version, Divvy has an impressive small business budget app offering convenient drafting and tracking of the budget on the go.

If you’re looking for a simple, easy-to-use yet impressive budget planner, budgeter is perfect for you. You don’t have to download or install it as it is web-based and super lightweight. Without an extraordinary knowledge of Excel and spreadsheets, you can comfortably work with this budgeting tool.

There are other small business budget software that you can try for free. However, you can also try the paid versions for more automation and convenience. Such as:

• Planning Maestro

You can create a small business budget in 5 minutes if you have all the estimates ready. All you have to do is to download a budget template, input the values, and get the automated output for the estimations. Similarly, you can also calculate the variances by automated calculators integrated into the templates or budgeting software.

There is no absolute value of how much a small business budget should be. It can differ based on the type of business you’re in, the business stage, your target market, sales, etc. A freelance writing firm’s budget will be different from a big city restaurant’s budget.

You can create your own in-house reusable business budget template by following the step-by-step guide we’ve shared above . Besides, you can also use a business budget template as a reference and modify it according to your unique business needs.

More broadly, budget records estimated revenues, fixed expenses, variable expenses, and profit margin. Every section is sub-categorized according to the types of expenses and revenues. You can check the step-by-step guide to create a small business budget to know what should be included in a small business budget.

The answer is ‘it depends.’ Your marketing budget is always a specific percentage of your revenues. Suppose you’re running a small business targeting B2B (Business to Business) customers, your marketing budget can be between 2 to 5% of the revenue . A B2C (Business to Consumer) business can have a higher budget between 5 to 10% . However, it is not a fixed budget but a common practice in the industry. Your marketing budget can vary depending on unique needs and return on investment.

Key Takeaways

Small business budgeting is crucial to the success of your business. Without a business budget, you cannot track where, when, and what to spend. Cash flow shortage and low financing are some of the biggest reasons businesses fail. Therefore, you cannot afford to ignore your business budget to grow and sustain in the industry.

There are many free templates, open-source software, and applications for budgeting . You can leverage them to plan, implement, and track your business expenses to help you make informed decisions.

Creating and analyzing the financials of a potential business is something our team guides you through in the Gauntlet and Acceleration Program. If you are interested in learning more about this process, click here .

Acquira is a business acquisition in a box service. We help entrepreneurs buy businesses and we invest in them and their chosen businesses. We are here to help ensure that each business we work with is posed to make the biggest positive impact possible for its owners, employees, and community.

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10+ Business Plan Budget Examples [ Financial, Company, Corporate ]

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1. Assess and Analyze the Entire Cost

2. list down your the resources, 3. make some estimates, 4. set some budget goals.

• Assess and Analyze the Entire Cost
• List Down Your the Resources
• Make Some Estimates
• Set Some Budget Goals

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Create the best Sales Commission Plan to attract sales superstars

A sales commission is an incentive that an organization pays salespeople for every sale they make. Read on to know how you can create a sales commission plan for your business with examples.

What is a sales commission plan?

Sales is a competitive profession. In order to succeed, salespeople must constantly outsell the competition to propel your business forward. And to ensure that your salespeople continue to give their best in every battle, you need to reward them for their victories.

That’s where sales commissions come in. 

A sales commission plan is a monetary incentive for motivating salespeople to meet their sales quota. The aim is simple: growing your sales and business by incentivizing salespeople to achieve more than a target they’re comfortable in.

The sales commission structure that you develop for your business plays an important role in

• Attracting and retaining the best sales talents in the industry.
• Motivating your sales teams to sell better and keep their morale high

Keeping the above in mind, let’s have a look at all the factors you need to work out as you create the best sales commission plan.

Creating your sales commission plan

In our previous post about the basics of sales commission , we learned the importance of sales commission and the different types of sales commission structures. Let's quickly recap -