Free Small-Business Budget Templates

As a business owner, you’re likely familiar with unexpected expenses. New equipment, hiring expenses, and unplanned events can add up, so it’s wise to plan ahead as much as you can. Small business budgeting is crucial to the success of your business.

• Your cost of goods sold would include the supplies (like wood, stain and hardware) and labor required for you to produce your products.
• And if you share expenses with someone else, make sure you’re both on the same page with the budget and keep each other on track.
• If you have a budget, you can improve your credit utilization ratio as well as have impressive ROI on your credit investments.
• Consolidate them to have an estimate of total revenues for the next financial period.
• A budget is a detailed plan that outlines where you’ll spend your money monthly or annually.
• It’s all of the cash you bring in the door, regardless of what you spent to get there.

However, it’s often more efficient to download a template (see our list above). A template with built-in tables and formulas makes plugging in your revenue and expenses and calculating your profit or loss quick and straightforward. Therefore, your budget should be easy to access and adjust on an ongoing basis. Fortunately, you don’t have to spend a lot of money on fancy budgeting software. There are several free small-business budget templates available online. Both fixed expenses and variable expenses are recurring in nature, making it easy to account for them (even if variable expenses must be projected).

Prepare a profit and loss statement

And you can know this only if you have a budget prepared ahead of allocation. Before we get into how to create a small business budget, it is important to answer why a business needs a budget. Your total number of income sources will depend on your business model. Now you’re ready to find your net profit—or what’s referred to as the bottom line. Total up the rest of your upcoming expenses for the month and subtract that number from your gross profit to find your net profit. For example, if you order more stock, your cost per unit will be lower, but your overall spend will be higher.

A business budget is a plan for how you’ll spend the money your business generates—every month, quarter and year. It gives you a roadmap for predicting and tracking expenses, revenue and profit. It also helps you decide what to do with business profit, when and where to cut spending and grow revenue, and how to invest for growth when the time comes. If your small business doesn’t have access to these features or has simple financials, you can download free small-business budget templates to manually create and track your budget. Your small-business budget will include your revenue, expenses and your profit or loss. For example, under revenue, you might have sales and income from sponsorships.

And if you haven’t already, consider meeting with a tax professional to create a specific plan for your business. While you’ll eventually need to create annual and quarterly budgets, just start small for now. Try setting up a monthly budget and making that a keystone habit (aka a habit that helps kick-start other habits). This is the easiest way to stay out of the weeds but still crush your goal of controlling your finances.

What’s a Business Budget—and Why Is It Important?

Creating a budget is a great way to track where your money goes each month and an important step to getting your finances in order. A budget can make it easier for you to achieve financial milestones, such as building an emergency fund or saving for a down payment on a home. One potential culprit behind this lower than expected profit margin could be an inefficient management of resources. In 2016, your total expenses were 55% of total sales, up from 45% in 2015. ” You may like the sound of that, but by only focusing on an ever-increasing number of sales you won’t have a full picture of your company.

The role of the budget as a managerial decision-making tool is unquestionable. Now that you understand why business budget creation is so important, Building business budget let’s jump into how to do it. But there’s one element that you want to stay on top of from the very beginning—and that’s your business budget.

Understand Your Organization’s Goals

Here are some free and open source small business budgets you can try. After estimations, it’s time to allocate a budget to each department based on the estimated values. Chances are higher that you’ll have successful negotiations and, as a result, lower variable costs per unit.

• If your business has a busy season and a slow season, budgeting is doubly important.
• Now, let’s get into a simple process for creating your own budget.
• This means that there is no one-size-fits-all budget plan for small businesses.
• If you don’t have a physical product, focus on projected sales, revenue, salaries, and consultant costs.
• This outline can help you determine whether you’re earning and spending within your abilities.

It will make the picture clear about what to expect from your budget in the future. For instance, in a manufacturing business, raw material is a variable cost. The use of material also varies according to the number of units produced and sold. Now, let’s get into a simple process for creating your own budget. When a business has a prepared budget for the future, it has a foundation to compare its performance.

Subtract variable expenses

Budgeting uses past months’ numbers to help you make financially conservative projections for the future and wiser business decisions for the present. If you’ve had a few bad months and predict another slow one, you can prepare to minimize expenses where possible. If business has been booming and you’re bringing in new customers, maybe you invest in buying more inventory to satisfy increased demand. To help you through the process, Capterra has included a detailed Instructions tab, which walks you through how to use the template step by step.

Every small business owner tends to have a slightly different process, situation, or way of budgeting. However, there are some parameters found in nearly every budget that you can employ. Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Take your gross revenue from Step 3 (the total amount of money you expect to make this month) and subtract the cost of goods sold to find your gross profit. Once you’ve got your big list of expenses, it helps to break it down into categories. Categorizing your budget will keep you from feeling overwhelmed by all those numbers.

Importance of Budgeting in a Small Business

Let’s take a look at how to create a small business budget in five simple, straightforward steps. Most organizations also prepare what’s known as an “actual budget” or “actual report” to compare estimates against reality following the period covered by the budget. This allows an organization to understand where it went wrong in the budgeting process and adjust estimates moving forward. Create your budget yearly—a 12-month budget is standard fare—with quarterly or monthly updates and check-ins to ensure you’re on track. A budget is a detailed plan that outlines where you’ll spend your money monthly or annually.

These costs are easy to predict, so they’re easy to work into your budget. All a budget does is predict income and expenses so you’ll know where you’re at with profits. Just like how you start your personal budget with your income, you’ll start your business budget with business income (also called revenue). Your revenue is the money you earn in exchange for your products or services.

To do this, you’ll have to start saving (and we mean really save) as soon as you can. The IRS is standing by to “help” you meet your tax obligation, so be ready! How much you’ll owe depends on how much you make, but a good rule of thumb is to set aside 25% of your net profit for taxes. You might even want to create a separate bank account to stash your tax money just to make sure you don’t overspend.

Here is a small business budget template for excel that you can play around with. The template has everything sorted with automatic calculations of variances for expenses and income. Fixed costs are any expenses that remain constant over time and don’t dramatically vary from week to week or month to month.

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