Skip to main content

6 Easy Steps for a Stronger Business Budget

You’ve recently acquired or launched a small business, and you possess expertise in your industry. However, you currently lack the necessary skills in bookkeeping, specifically when it comes to budgeting. The good news is that crafting a budget, or at least making a reliable estimation of the required financial resources, is quite achievable.

Estimating and aligning expenses with revenue, whether it’s based on actual or anticipated figures, holds great significance. It empowers small business owners to assess whether they have adequate funds to support their daily operations, expand their business, and generate personal income. Operating without a budget or a well-structured plan poses the risk of overspending or, conversely, not investing sufficiently in growth and competitiveness.

Initiating Your Business Budget

business budget

While each small business owner may have a unique approach to budgeting, there are universal parameters to consider. These include rent, utility bills, payroll, COGS, interest payments, and taxes. These expenses, along with any others tied to the business, are essential for setting up or taking over a business.

For existing businesses, base revenue assumptions on recent performance trends. Startups should consider factors like location, operating hours, and local market research. Visiting other businesses for sale and gathering information on their weekly revenue and customer traffic can provide valuable insights.

Once you have this data, align your business’s revenue with expenses to determine average weekly costs for overhead, utilities, labor, and materials. This information helps estimate if there will be surplus funds for growth or savings. Alternatively, it may reveal that the business needs higher weekly revenue to support additional employees or other goals.

These six straightforward tips will guide you in creating a robust small business budget:

1. Examine Industry Standards

pie chart

While businesses vary, industry norms remain consistent. Research online, connect with local business owners, visit the library, and check the IRS website for insights on typical revenue allocation across expense categories.

Small businesses, more susceptible to industry changes than larger competitors, should focus on averages rather than specific figures.

2. Develop a Budget Spreadsheet


Before purchasing or launching a business, create a spreadsheet to estimate the total dollar amount and the percentage of revenue that must be allocated to raw materials and other expenses. It’s advisable to establish communication with potential suppliers before proceeding. Additionally, understanding the various types of budgets required for your small business and how to implement them is crucial.

3. Incorporate Flexibility


Keep in mind that revenue growth projections and expense assumptions are estimates, not fixed. Introduce flexibility to ensure you have ample funds before expanding or hiring new employees.

4. Explore Cost Reduction

cost reduction

When dealing with financial constraints and needing funds for crucial expenses, advertising, or seizing opportunities, explore cost-cutting options. Focus on areas you can control and time purchases to align with billing cycles or take advantage of extended payment terms from suppliers and creditors. These adjustments can offer relief to business owners.

5. Conduct Regular Business Budget Reviews

business review

Many companies create annual budgets, but small business owners often plan only a month or two ahead due to volatility and unexpected expenses. A budget planning calendar can help ensure you have enough capital for changing business needs.

6. Compare Services and Suppliers


Don’t hesitate to seek new suppliers or explore cost-saving opportunities for services related to your business. This practice should be ongoing, whether you’re starting or purchasing a business, establishing annual or monthly budgets, or conducting periodic assessments of your business operations.

In Conclusion

Budgeting is a crucial process where business owners predict and align current and future revenue with expenses. Additionally, the goal is to ensure enough funds for sustainability, growth, competitiveness, and establishing an emergency fund for business stability and growth.

To wrap it up, remember that effective budgeting is key to your business’s success. If you find yourself needing further guidance or assistance along the way, don’t hesitate to reach out to us at Count. We’re here to support your financial journey and help you achieve your business goals.

Start with Count today

Signing up for Count is easy. We think once you experience truly stress-free financial processes, you won’t want to go back.