How to Create a Budget: Step-By-Step Guide

how to make a budget for a business

If you create a rough budget and later discover that you need more money for your business activities, this will jeopardize your goals. Your budget should be such that you can increase your revenue and profit enough as your business expands to handle your growing expenses. Your budget should factor in fixed, variable, one-time, and unexpected costs. Some examples of a fixed expense are rent, mortgages, salaries, internet, accounting services, and insurance. Examples of variable costs include cost of goods sold and commissions for labor.

  • This means that there is no one-size-fits-all budget plan for small businesses.
  • This can give you an understanding of how much you earn each month on average.
  • This will help you stay organized and on track with your budget.
  • If you freelance, are self employed or simply don’t receive a regular paycheck, you’ll need to subtract taxes from your income amount.

You’ll either want to hire PR services or consider doing outreach personally. These days, it’s crucial to invest in professional visual content to stand out on social media. You are immediately taken more seriously when it’s obvious you are taking the act of branding yourself seriously.

How to make a budget for your small business

Our friends at Intuit QuickBooks have created an annual business budget you can use for free. Read this LendingClub Business Checking Account review to see if it’s a good choice for you. Wise Business is a great option for paying overseas suppliers and saving money. With Wise, you can send and receive payments in multiple currencies, making international payments quick and easy.

Businesses and governments rely on budgets to track revenues and expenditures, but you might be most familiar with a budget as a tool for managing your finances. If, however, your expenses are higher than your income, then you need to adjust your spending. You can do this by playing with any of the non-fixed expenses.

Budgeting best practices for business

If the water bill comes in lower, then celebrate and move that money over to your current money goal—or add it to a budget line that went over. Make a budget category for each of these and create budget lines underneath for your specific expenses. First, decide if you’re making a budget on paper, with a spreadsheet or in an app. (We know a great tool called EveryDollar. Just saying.) Either way, it’s totally okay to start by writing out everything on a sheet of paper.

how to make a budget for a business

Perhaps you’re working out of your home, but plan on renting or buying a building for your business in the next year or two. One catastrophe can be disastrous for your business, particularly if you operate how to make a budget for a business on limited cash flow. While it may seem counterintuitive to include unexpected costs into your budget when they haven’t even occurred yet, you can safely assume that something unexpected will happen.

Plan for unexpected expenses and put money aside for them

A contingency fund for emergencies will safeguard your business when these unexpected costs arise. So while it’s tempting to spend that extra income to buy that new MacBook you don’t need, don’t do it. A good rule of thumb is to set aside three to six months of your small business operating expenses. Budgeting can be intimidating, but don’t worry—you don’t need a financial or accounting background to create a small business budget. In this post, I’m going to cover all of the budgeting basics you need to know, show you how to create a small business budget, and then provide templates so you’re not starting from scratch.

  • You identify what you own of value (your assets), estimate your upcoming expenses, and account for and grow your revenue base.
  • The good news is that it is possible to come up with a budget (or at least a good estimation of what will be needed in terms of dollars and cents) fairly easily.
  • Wave is one of the most popular budgeting tools for small businesses with basic demands.
  • They depend entirely on the number of goods or services you need to operate in a given timeframe.
  • WordStream’s guest authors are experts, entrepreneurs, and passionate writers in the online marketing community who bring diverse perspectives to our blog on a wide range of topics.

But when it comes to marketing, you also want to be careful not to spend all your valuable time in this endeavor. Therefore, it can be beneficial to let the industry professionals handle some of these tasks so you can focus on creating. Run contests, social media challenges, or ask for testimonials and reviews to encourage user-generated content creation. This approach isn’t only cost-effective, but also helps in building a strong community around your brand. If your budget includes saving, consider keeping your nest egg in a high-yield savings account, which can offer higher rates and lower fees. If you struggle with staying on budget, consider an accountability partner who can offer encouragement, advice, and motivation for following your budget plan.


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