A business budget is a document that logs all your company’s income and expenditure. It allows businesses to track their cashflow, monitor profits or losses, and help plan for the future.

It might feel daunting setting out a 5 year or even a yearly business plan; seeing your expenses in black and white can be a bit of a shock. Many businesses bury their heads in the sand and figure it out along the way, and although this may work out for some, it’s recommended to create a business budget in order to plan and predict your expenditures.

WHY BUDGETING IS IMPORTANT TO YOUR BUSINESS

You need to have a good understanding of how your business is operating in order to achieve your business goals and figure out where to implement change. If you lose track of your outgoings, you might fall short when you need to pay essential bills or invest in new assets. By logging your payments, daily, monthly and yearly, you can see where you’re overspending and make any necessary changes to streamline processes and save money.

BENEFITS OF A BUSINESS BUDGET PLAN

Once you get started, it’s important to review your budget regularly. Not only will this keep you on top of things, but it’ll also become part of your weekly or monthly routine, making it easier to analyse. It also:

• Monitors all your finances, invoices and expenditures
• Helps with short and long-term business decisions
• Potentially prevents you going into debt
• Can be used to obtain a business loan or asset finance

HOW TO CREATE A BUSINESS BUDGET PLAN

There are lots of business budget templates and tools available online for you to download and use. You can also split your budget into different areas of your business so it’s easier to digest, such as:

• Operating budget plan
• Staffing budget plan
• Stock budget plan
• Cash budget plan

All budgets tend to include the following categories:

• Estimated income (daily, weekly, monthly or yearly)
• Fixed costs (staff, equipment etc.)
• Variable costs (energy bills, rent etc.)
• One-off payments (breakdowns, investments etc.)
• Profit (daily, weekly, monthly or yearly)

It’s important you are honest and exact with your budget. Don’t round up or down as you won’t create a clear picture of how your business is performing financially and what action you need to take.

HELPFUL INFORMATION

Here at Busby Finance, our team are on hand to support you and your business goals. The content within this blog should be used for information purposes only and cannot be considered as legal or financial advice. If you have any queries, please get in touch.