In this example of a small business budget, we’ve listed sample income, expense, and cash flow information using categories that are relevant to a small retail business. This template is fully customizable and can be used for a small business in any industry. You can also download a blank version of this template in the small business budget starter how to create a business budget kit below.
Practical Spreadsheets’ Income statement template
Getting your revenue projections right can be challenging, but with practice and the right adjusting entries tools, you’ll get a clearer picture of what to expect. If you’re operating with a poorly-written budget – or worse, no budget at all – it’s going to be difficult to find lasting success. Plus, making a budget right from the beginning gives your business a boost. A financial professional will offer guidance based on the information provided and offer a no-obligation call to better understand your situation. At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content.
Does using a small-business budget template save time?
Develop a month-by-month cash flow forecast to ensure you’ll have sufficient funds to cover expenses throughout the year. This helps you identify potential cash shortages, plan for large expenses or investments, and Partnership Accounting make informed decisions about timing of purchases or hiring. 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. One of the first steps in any budgeting exercise is to look at your existing business and find all of your revenue sources.
- This will help you set realistic goals for your team, leading to the eventual growth of your business.
- It’s a good idea to review historical data and use conservative estimates to avoid this mistake.
- Having a good business budget is key to maintaining smooth cash flow, managing expenses, and preparing for any unexpected costs.
- Fixed costs are the expenses that stay the same each month, regardless of your business’s revenue.
- At the least, this strategy creates discord between top management and operating personnel due to conflicting views.
Create a Contingency Fund
- To create your budget, you can start by subtracting all the “needs” expenses from your net income.
- Get essential bookkeeping tips for small businesses, from tracking expenses to managing cash flow and preparing for taxes.
- If you don’t employ an attorney, it may be time to consider hiring your own in-house attorney or the consulting services of an accounting firm.
- We’ll even give you a link to an easy-to-use small-business budget template in the EntreLeader’s Guide to Business Finances.
- If you don’t already have one, open an account under your company’s name.
Meaning, you can allocate some extra cash each month just in case — any money that isn’t spent, you can roll it over onto the next month. Although some people think a budget will cramp their style, the truth is that a budget doesn’t have to hold you back, restrict you from fun, or sour your lifestyle. It can eventually set you free from the financial burdens that are keeping you from setting and reaching your ultimate life goals. With this technique, you write the name and cash amount you have for each spending category for a month. For example, you allocate $2,000 for housing for one envelope, and $600 for food in another. Your discretionary expenses could include shopping, entertainment, personal care, travel, and other expenses that may not necessarily be considered essential.
Cash flow is the relationship between incoming and outgoing money over time. Are the points in the month where you don’t have the funds you need? Analyze your use of credit or cash reserves to get through your monthly budget more smoothly. A well-crafted budget is essential to the success of any small business. It helps you stay in control of your finances, make informed decisions, and prepare for the future.
Step 5: Estimate Administrative Costs
The next logical step after budgeting inventory and purchases is to determine the COGS. Through the COGS budget, we can estimate the level of COGS per quarter. This budget is necessary for preparing the proforma income statement. After performing the groundwork for budgeting, the next step is determining the key assumptions. These assumptions make it easy to prepare budgets since not all information is readily available until it happens.