{"id":3104,"date":"2017-11-10T17:56:59","date_gmt":"2017-11-10T17:56:59","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=3104"},"modified":"2026-01-29T10:44:40","modified_gmt":"2026-01-29T10:44:40","slug":"create-budget-for-your-business","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/create-budget-for-your-business\/","title":{"rendered":"How to create a budget for your small business"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tHow to create a budget for your small business\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2017-11-10T17:56:59+00:00\">10 November, 2017<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"How to create a budget for your small business\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/create-budget-for-your-business\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/anthonysherick\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2017\/11\/V3A8711-350x350.jpg\" class=\"entry-author__image\" alt=\"Anthony Sherick\" \/>\t\t\t\t<span class=\"entry-author__name\">Anthony Sherick<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>A budget is vital for any business. It allows you to track cash flow and business expenses, and determine how much revenue you will need to make to stay afloat or to make a profit. It will also enable you to track your finances on a monthly basis and see where you can cut costs and save money along the way.<\/p>\n\n\n\n<p>A number of different budget templates are available online, however to get your budget started, there is a very simple structure you can use. An effective financial budget should include a month-to-month plan, so you will need to start with 12 columns, one for each month.<\/p>\n\n\n\n<p>For each month, you\u2019ll then need to record your sales forecast, all your business expenses and your estimated profits. This will give you a good indication of what your business can expect to be making on a monthly basis.<\/p>\n\n\n\n<p>As well as putting together a monthly plan for your first calendar year, you should make a longer-term plan to cover a period of three to five years \u2013 even if this is just on an annual basis.<\/p>\n\n\n\n<p>Here is more information on the three main parts of your budget, what should be included in them and how to record them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-forecast-sales\"><strong>Forecast sales <\/strong><\/h2>\n\n\n\n<p>You need to have a sales section to note down all your expected income. If you are an experienced business, you will have previous data to use for your sales forecast. However, if you are just starting out, this will be a little trickier as you won\u2019t have previous sales data, so you will need to carry out thorough market research to make a forecast of your sales.<\/p>\n\n\n\n<p>There are several different sources that can give you a good idea of what your sales figures will look like. Looking into your competitors and finding out the industry standard is one way to help you set your sales expectations. You can also contact suppliers and manufacturers to give you figures of the products or services you are going to sell. All this information will help you calculate a reasonably accurate sales forecast.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-business-expenses\"><strong>Business expenses <\/strong><\/h2>\n\n\n\n<p>The business expenses section of your budget will cover all the different types of costs your business is going to be paying out. To make sure you\u2019re covering all your costs in your budget, make a list of them and keep revisiting it, adding to it when necessary.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-fixed-costs\"><strong>Fixed costs<\/strong><\/h3>\n\n\n\n<p>These remain the same on a monthly basis and include things such as insurance, loans, rent or mortgage expenses. Any costs that are regular (monthly or annually) should be included in this section. Looking at your bank statements will help you see what other costs you have that come under this category, as you may have numerous direct debits set up that need to be taken into consideration.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-semi-variable-costs\"><strong>Semi-variable costs<\/strong><\/h3>\n\n\n\n<p>These usually stay the same but may change over a longer period of time. Semi-variable costs could include your employees\u2019 salaries or your marketing budget, as depending on the financial situation of your business, you may decide to give an employee a pay rise, or invest more in marketing to help the growth of your business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-variable-costs\"><strong>Variable costs<\/strong><\/h3>\n\n\n\n<p>These are the ones that will likely change sporadically. They will include the costs of the raw materials or products that you get from your manufacturer or supplier. If you are bookshop owner, for example, the cost of buying the books for your store will come under the variable costs section.<\/p>\n\n\n\n<p>When you are working out averages for your costs, especially your variables, you need to be realistic and leave room for error. It\u2019s better to overestimate your costs than underestimate them, as this will help you deal with any extra costs or higher bill rates that were not previously in your budget.<\/p>\n\n\n\n<p>Life isn\u2019t always predictable and things can and will come up, so setting aside a certain amount for miscellaneous charges is essential.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-profits\"><strong>Profits <\/strong><\/h2>\n\n\n\n<p>Once you\u2019ve worked out your predicted sales and business expenses, they should give you a good idea of what kind of profit margin to expect.<\/p>\n\n\n\n<p>When you start your business, any profit you make might have to be reinvested into the firm. And even if your budget predicts that you<em> will<\/em> be making a large profit, you may be considering using some of this to give an employee a pay rise, or to invest in expanding your business.<\/p>\n\n\n\n<p>Essentially, having a budget with an estimated profit will enable you to make long-term goals and objectives for your business.<\/p>\n\n\n\n<p>A company\u2019s finances are what can ultimately make or break their business, so having a continuously updated budget is vital for the success of any organisation.<\/p>\n\n\n\n<p>If you are spending a lot of time on your budget, it could be worth investing in small business financial software. This will provide a clear breakdown of your profits and expenses, and help you to save time on admin by automating regular tasks.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">A free guide to managing your cash flow<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Our guide is packed with expert advice to help you stay on top of your cash flow.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-a1fc2b60-1af9-49cb-89bd-02dd52c9de29\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Get your free guide<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1261586981-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1261586981-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A budget is vital for any business. It allows you to track cash flow and business expenses, and determine how much revenue you will need to make to stay afloat or to make a profit. It will also enable you to track your finances on a monthly basis and see where you can cut costs [&hellip;]<\/p>\n","protected":false},"author":376,"featured_media":2921,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[6],"tags":[24,12],"business_type":[4],"lilypad":[],"context":[],"industry":[],"persona":[73,74,75],"imagine_tag":[109],"coauthors":[453],"class_list":["post-3104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-cash-flow","tag-start-business","business_type-small-business"],"sage_meta":{"region":"en-gb","author_name":"Anthony Sherick","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2017\/09\/GettyImages-554995563_super.jpg","imagine_tags":{"109":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice UK","distributor_original_site_url":"https:\/\/www.sage.com\/en-gb\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/3104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/users\/376"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/comments?post=3104"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/3104\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media\/2921"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media?parent=3104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/categories?post=3104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/tags?post=3104"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/business_type?post=3104"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/lilypad?post=3104"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/context?post=3104"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/industry?post=3104"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/persona?post=3104"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/imagine_tag?post=3104"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/coauthors?post=3104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}