MENU
Business.com aims to help business owners make informed decisions to support and grow their companies. We research and recommend products and services suitable for various business types, investing thousands of hours each year in this process.
As a business, we need to generate revenue to sustain our content. We have financial relationships with some companies we cover, earning commissions when readers purchase from our partners or share information about their needs. These relationships do not dictate our advice and recommendations. Our editorial team independently evaluates and recommends products and services based on their research and expertise. Learn more about our process and partners here.
A budget helps you estimate your spending and revenue so your business remains financially stable.
Creating a budget for your business may seem daunting. However, it’s a crucial first step in any successful business plan. While a business budget can take multiple forms, it will include how much money you have coming in and what you must spend to continue operating. It also shows how much money you must earn to continue making a profit and paying your expenses.
A business budget template is a customizable worksheet business owners can use as a budget planning guide. Budget planning templates can be a huge help for business owners who don’t have time to create a business budget from scratch. They’re handy tools that give you a place to record all your numbers in an organized way, helping you set up an easy-to-read budget you can update quickly.
Budgets can be complicated, so consider downloading a template if this is your first time creating a business budget. Even if you choose to create your own, referring to templates or sample budgets may be helpful to keep yourself on the right track.
If you’re unsure where to begin, download Business.com’s free budget template. This template will help you track your expenses, estimate your monthly income and record what you earned and spent.
Our budget template has five tabs. To use it, take the following steps:
Here’s a breakdown of how to use the other four tabs.
The Annual Budget tab examines how much money your business brings in each year. Use this tab to input your company’s yearly revenue and expenses. Be as specific and detailed as possible because this information is used throughout the budget template.
The Monthly Budget tab shows your monthly expenses. Since you already filled out the Annual Budget information, this data has been prorated and you have monthly estimates for each of your yearly totals.
By default, each month’s budget is weighted equally. However, you can change this by updating the percentages in line 5. Your percentages must add up to 100.
The Monthly Actuals tab is for financial tracking. You’ll use this tab to track your actual expenses and revenue as they come in each month, allowing you to see how much money your business is making.
The Overview tab shows how your actual numbers compare to your budget. It gives an overview of your annual and monthly budgets. This information helps you see where your business is doing well and identify areas for improvement. To see your finances for a particular month, select that month from the drop-down list in line 4.
A business budget template is vital to keep your expenses and financial goals updated. A good template makes it easy to see how much money you have available, what you need to pay for and how much money you have left after covering your necessary fixed and variable expenses.
Your business budget template will show you if you can grow your business, give yourself or your employees raises and purchase inventory and assets. If you don’t have sufficient money coming in, it will reveal which bills you don’t have the funds to pay or if you are nearing bankruptcy.
If you must apply for a business loan or grant, the application may ask for financial accounting documentation, such as a monthly or annual budget, to give the lender an idea of your business’s financial standing and how you manage your money. For these reasons, having an up-to-date budget from the beginning is in your best interest.
If your business is new or in the planning stages, creating a budget is tricky ― even with a template – because you don’t have actual numbers to plug in. Still, it’s something you need for your business plan and loan applications.
Here are five steps to help you create a startup budget to get your business off on the right foot.
Your budget goal is the total amount you are willing to spend on your business. Setting this number helps you establish clear parameters for your budget from the beginning and keep your spending in check.
To set your goal, consider the amount of money you currently have or can realistically obtain. How much money makes sense for you to spend? Keep in mind that loans must be repaid, often with interest and you shouldn’t deplete your personal savings.
For this step, brainstorm all potential expenses on a budget worksheet. Begin with your startup costs, which are any one-time expenses related to starting your business.
Startup costs could include a building (if you’re buying, not renting), computers and photography equipment. Be specific and write down the exact costs of every item you must purchase and any associated costs. For example, to build a website, you must pay for a designer, host, domain name, plugins, stock photos and security software.
Next, categorize each item as “essential,” “nonessential,” or “later”:
Add up your essential and nonessential items to get your estimated startup costs.
Your losses are how long you will go without turning a profit while accumulating overhead expenses. Losses are a result of a new business needing time to build a customer base and your budget must reflect them.
Start by calculating your estimated monthly overhead costs, including subcontractors, payroll, software subscriptions, website fees, rent and advertising fees. This will create your operating budget.
Next, estimate how many months you will go without revenue. Forecasting income can be difficult when starting out, so determine your break-even number and use that figure to make an educated guess.
Given the unpredictable nature of starting a business, it’s easy to exceed your estimated budget. Building some financial padding into your budget can help you cover unexpected costs.
Think of this money like a vehicle’s airbags ― they’re used only in an actual emergency. To create your safety net, add 10 percent to each expense in your startup budget and 15 percent to your monthly operating costs.
Now that you have some rough numbers to work with, it’s time to tighten them up to make your budget more actionable. Start by going through your nonessential startup items. Is there anything you can cut out or move to the “later” category? Can you reduce the cost of any items by buying something secondhand or trading labor?
Next, look at your overhead costs and determine if any are unnecessary and can be cut. If you can’t get your budget to balance, you can also reevaluate your essential costs. Go through them with a trusted advisor or colleague to determine if they are all truly essential to starting your business.