How to Effectively Budget For Your Small Business

You have probably heard the saying “every penny counts”; it’s not an overstatement. As a small business owner – whether you’re just starting out or are well-established – you have to plan and keep track of where every dollar goes each month. If you don’t, you will end up missing opportunities for cutting costs, and will wind up putting money where it has the least impact.

Another reason for creating a good small business budget, is to increase your credibility with a lender when applying for a business loan. Some lenders ask to see how much your budget is, what your cash flow situation will look like in your first three years of business, then decide (besides taking all other factors into consideration) if you are eligible for a loan.

Overall, creating a smart budget for your small business is the best way to see where you are spending money, how to manage it, what you need to meet your business goals and get a business loan.

Check to see if you are eligible for a loan [click here]

What exactly is a business budget, anyway?

A budget is a comprehensive plan that outlines where your money goes for your business each week, month, and even year. You create a plan where you decide the best use of your business funds, and then go back and compare it with the real funds to see how you did. The benefits of budgeting allows you to predict how much you are expected to earn, plan where to spend that money and see where your plan, and the reality of funds, differs.

Need to calculate your business loan? We got you covered [click here]

5 simple steps to business budgeting

1. Keep track of your income sources —

First, figure out how much money you bring to the business on a monthly basis. You can begin with your sales figures, and then add other income sources that contribute to your business.

2. Figure out fixed costs —

These are the expenses that are charged the same price each month. To do this, review your past bank statements and spot your fixed expenses and how much they cost you each month.

3. Record variable costs

These are purchases that don’t have a fixed price each month. They can be scaled up or down depending on your monthly profit. After paying all your costs, you can then determine your profit for each month. If your business does better than you expected, you can use that extra funds to increase your variable expenses and grow your business.

4. Document one-time costs —

Sometimes certain purchases come up unexpectedly, like buying a computer to replace the one that crashed. Creating a budget enables you to factor in one-time purchases better. It also helps you budget for months in advance, (like that business retreat you’ve been meaning to take your staff on), so that you don’t fall under financial burden.

5. Create a checklist and put it all together —

The first four steps where how-to’s. This last step is examples, checklists, and resources for creating your small business budget.


  • Sales Revenue
  • Interest
  • Investment
  • Refunds

Fixed Costs:

  • Rent
  • Salaries
  • Utilities
  • Cellphone
  • Insurance

Variable expenses:

  • Advertising
  • Delivery
  • Health insurance
  •  Commission
  • Printing Services
  • Hiring costs

One-time costs:

  • Computer
  • Furniture
  • Office decor
  • Office supplies

Creating a small business budget may seem a tad annoying, especially if you are busy running your business. But it’s worth it! It’s a fantastic way of keeping track of your finances and making the right decision for your business.

Happy budgeting!