Creating a Budget for Your Small Business




Here are some key considerations when putting together the annual businessbudget for your operation.

Set Up an Easy-to-Access Spreadsheet
Since you’re going to access, update, and review your business budget many times throughout the year, you need to keep your spreadsheet accessible. This is an actionable document that you should refer to when negotiating terms with suppliers, discussing terms with your advertisers and evaluating options for small business financing.


Choose the option that makes most sense for your way of doing business but try to make it accessible on-the-go. Some options are storing an MS Excel file on your tablet, maintaining a Google Sheet on your Google Drive, or sharing a spreadsheet file on your company’s Dropbox account.

Break Down the Year Into Months
A budget is the expected future financial performance for a business. While annual totals are useful benchmarks to keep track of your performance, you’ll have more direct control over the month that you’re currently working on.

Compare Budgeted Against Actual Amounts
For every month, you’ll budget an amount that you’ll compare against the actual performance for that month. Big differences will raise red flags (or provide pleasant surprises!), empower you to act in a timely manner, and allow you to plan ahead for the rest of the year.

Keep Track of Operating Expenses
There are many reasons why it’s important to separate business and personalfinances. Proper budgeting forces you to reconcile your business income and expenses on a monthly basis, which is particularly useful when you do your own bookkeeping. Another benefit of keeping track of operating expenses regularly is that you’ll have an easier time when you’re preparing for your tax return.

Putting It All Together

We have put together a ready-for-use template on Excel here. Feel free to use this sample spreadsheet and adjust it to the unique needs of your small business. Using this business budget template, you should be able to answer all of the questions from our sample scenario and any other ones that you can come up with. For example, you’ll be able to track the trajectory of your business and determine whether or not you’re ready to hire your first employees.

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