
Follow these steps to develop a robust financial plan that will serve as a roadmap for your business success. Their input can provide valuable insights and ensure buy-in for the final budget. Thorough preparation sets the stage for a more accurate and useful financial plan, leading to better financial management for your business. Effective cash how to create a business budget flow management is crucial for the survival and growth of any business.
Tailoring Budgets For Different Business Types
- You can also allocate some money to pay off your fixed vendor expenses.
- Pull together all your financial statements and look at how much you typically spend per month for different categories.
- All businesses should have a budget, especially small ones with less room for errors.
- Plan to review it monthly and make adjustments based on actual performance vs. projections, changes in the market or your business model, and unexpected challenges or opportunities.
- With Wise, you can send and receive payments in multiple currencies, making international payments quick and easy.
All expressions of opinion ledger account reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates. A balanced budget means that your anticipated income and expenses are equal, so your business should break even. As you receive new information about your actual sales, production, and other economic factors, you can adjust your business budget to suit the changing needs of your business.
Small business budget templates
Depending on where you live and your financial situation, your “needs” may exceed 50% of your income and saving 20% isn’t realistic for many people. You can put leftover money into savings every month — maybe an account at a bank or credit union. Saving money can help you during an emergency, or if you need to pay for something bigger, like a car or trip. You can even make savings one of the expenses you include in your budget. You can allocate a bit of money Accounting for Churches in your budget to be “just in case” funds.
- If you unexpectedly have to spend more in one of your “needs” categories you can use money from “wants” or “nice-to-haves” envelopes.
- Your ultimate goal is to create a 12–18-month business budget—and you will get there!
- The variance between estimated and actual spending helps establish a baseline for company performance.
- For solopreneurs, this could include freelance projects, product sales, or consulting fees.
- Similarly, incurring an expense does not always impact cash reserves immediately.
- Create your budget using the numbers from historical profit and loss statements.
- Traditional budgeting involves creating a detailed budget based on historical data and future projections.
Business Budget Step 1: Tally Your Income Sources
The second step to creating your budget is to look at your fixed costs, which are expenses that don’t change depending on your sales or production volume. A history of detailed, accurate budgets will also come in handy should you need to apply for loans or pitch your business to potential investors. You can identify many variable costs by looking through your previous financial statements to find regular purchases with fluctuating amounts. Although it’s more difficult to predict future variable costs, creating a broad estimate helps you budget for these expenses. Business budgets aren’t just for planning costs—they’re also valuable for setting sales goals and revenue projections.
Add up variable costs

Input your assumptions in the second tab of our downloadable spreadsheet. It’s the quality of your assumptions that will determine if your budget is realistic. As you improve your budgeting process, you’ll come up with additional assumptions to include in the process. Its budgeting functions create budgets per account in the chart of accounts. Read our QuickBooks Online review for detailed information on our recommendation.

Forecasting and Planning

Now that you’ve created your first month’s budget, move on to the next one. The more budget-building reps you get in, the better you’ll be at looking forward and planning for growth. In no time, you’ll reach that ultimate goal of a 12–18-month budget. Just keep adjusting as you go based on all you’re learning about getting an accurate road map for your finances. Follow the simple steps below to learn how to create a budget for a business and manage your finances with confidence. We’ll even give you a link to an easy-to-use small-business budget template in the EntreLeader’s Guide to Business Finances.
Identify your revenue streams
For those who prefer a more hands-on approach, spreadsheet software like Microsoft Excel or Google Sheets offers powerful budgeting capabilities. Many pre-designed templates are available, which you can customize to fit your business needs. Remember, the right budgeting approach should provide clarity, support decision-making, and help propel your business to achieve its financial objectives. If they fall short, consider increasing prices, finding ways to reduce expenses, or focusing on higher-margin products or services. 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. A business budget encourages you to look beyond next week and next month to next year, or even the next five years.