Having a budget that sincerely secures all your needs throughout the month is an excellent idea, but creating one for your business Qualifies as indispensable. Instead of rushing with the procedure, take your time with the budget so that you can readily control the costs, steer away from overspending and achieve the financial budgeting goals that you have been looking forward to.
There are several ways of approaching the task, but, referring to business budget samples and using budgeting worksheets that would eventually furnish you with enough clarity is the ideal way of complying with its requirements.
Topics we discuss,
What is the business budget?
The business budget will calculate the income and expense of the business for the required period. With the business budget, an organization will get a clear-cut picture of revenues and business expenditure.
By using the business budget, the firms will make the business decisions, whether to improve the business in some of the ways, expense adjustments, focus on marketing, equipment purchase, hire employees, and more. Business budget planning is one of the important key features for every business.
Read More: Budgeting Vs Financial Forecasting
The requisites of the budget
According to business analysts, there are a few things that a business budget must contain under all circumstances and in the following section, we will be jotting them down.
- Estimated sales, revenue, and profit.
- Fixed costs including loan payments, rent, electricity bills, business license expenses, and the like that must be cleared off regardless of your income.
- Variable costs- the ones which depend on your sales namely cost of raw materials, production, labor charge (if they work overtime), and several others.
- Semi-variable costs- these are the expenses that partially depend on the trades and can be adjusted if the sales are not at par with the expectations.
- Projected profits
Basic business budget sample
If you are comparatively new in this realm and do not want to go wrong with the whole setting, then starting with basic business budget examples containing strategic templates would be the right choice. Move on to the more detailed and complicated examples once your revenue starts multiplying and your business grows in size. Till then, a basic budget plan will take care of all your needs. In this, the income and expenditure are isolated from one another to deliver a firmer comprehension of the funds that are being drawn and spent.
Basic Business Budget Example
|Labor wages||Materials||Fixed costs||Variable costs||Budget||Actual||Difference|
|Total of Q1||$310||–||–||–||–||–||–|
Department budget sample
The thing with a department budget is that you will be able
to transparently draw out the income and expenses of your company as per its different divisions and therefore, efficiently calculate the percentage change across the years. Furthermore, you will easily get hold of the numbers right when you need them and weigh the configurations of the departments against each other to identify the shortages and surpluses.
Department Type Business Budget Example
12-month business budget sample
Lets say you are trying to settle for something that is more detailed and neatly laid out, then the 12-month business budget template is your ultimate answer. Then all you have to do is enter the details of your revenue and income estimations for each month of the year and then check if the real figures are at par with your appraisals. Next, you can create two of the following tables if needed to separate out the income and expenses to gain a clearer perspective.
12 Months Business Budget Example
|Profit and loss category||January||February||March||Total of Q1||April||May||June||Total of Q2||July|
|Sales and marketing costs||$100||$70||$80||$250||–||–||–||–||–|
|Admin and general||$70||$60||$100||$230||–||–||–||–||–|
The business budget planning process
Here are the 8 steps to reach the business budget planning process destination. These steps will assist you to create the right business budget for your business.
Also Read: Basic Business Budgeting Steps with Example
Look back at your existing data
The first point while starting the business budget planning process is to analyze your business’s existing information. It will guide us one step ahead. This step will always be solid evidence, proof for more businesses’ budget planning.
Estimate the revenue for existing
The next step is to be clear on how much you are going to spend. It will assist you to plan and list your core business requirements such as products, services, etc., In nature, it cannot be more accurate. But estimating will help you to make good business budget planning.
Know your business fixed costs
During the business plan, fixed cost is a significant key metric. Fixed cost is nothing but the cost of your business requirement, which is unavoidable. Whatever the profit or loss may happen, this cost can never be eliminated.
List your variable cost
Variable cost is contrasting to the fixed cost. This can be adjusted and changed as per your business requirement. This type of cost must be kept under your surveillance. Once your budget gets affected, your business variable cost must be avoided without hesitation.
For instant, sometimes spending more amount on digital marketing and ads will not balance your business finance. So you can match the budget by choosing a low-budget digital marketing service.
Forecast your additional spending
Review all your spending before splitting the costs type. There might include the cost type, which will not exist under both fixed and variable costs. Forecasting this type of spending will help you to make the right business budget planning for your organization.
Examine your business cash flow
Here starts your business budget analysis. Cash flow is your business money coming inside and going outside. Cash flow plays a major part in your business. Have a clear picture record of forecasted expenses and revenue. Spend money as per the budget. And adjust as per your business needs.
Go for the right business decision
It’s time to implement your business budget plan! Following the suitable steps as you planned and forecasted before with the above points will assist you to make the right business decision.
Delivering your plan to the team is your final step in business budget planning. Most people fail in the last step due to miscommunication. Additionally, you need to have all the required tools to reach the planning expectation.
Role of accounting software in budgeting
Business budgeting is not a simple task, it is a huge task. So budgeting needs assistance to complete. Preparing a keen budget includes cost analysis, revenue estimation, and cash flow projection. Holding an accounting system in place will provide you with real-time data about your finances, assisting you to prepare an achievable budget.
The key to preparing your business budget is by utilizing the before year’s historical data and drawing realistic projections. With the accounting system, you can pull all your required data to prepare the budget, it does not matter when you require it.
The soundest budget is also based on the strength of the projected goal which is achieved by your company. For estimating this, an accounting system will give you the business financial reports which will document your actuals. Next, these are compared with the budget.
In budgeting, comparing your business budget with your respective actuals is one of the significant steps to measure budget efficiency.
The right decision for business planning and budgeting
It is not possible to hold accurate business forecasting at all times. The business has ups and downs. Using software for financial forecasting and business budgeting will let you know what your company is doing with the money and predict your future business’s financial health.
What are some of the monthly expenses examples?
Some of the best examples of monthly expenses are – payroll, rents, supplies, insurance, and so on.
What is zero-based budgeting?
Zero-based budgeting concerns listing every expense to prepare a new budget from the start.
What are the types of business budgeting?
There are 10 types of business budgets, which are used commonly. Every business can follow the below-mentioned types of budgets:
- Master Budget
- Cash Flow Budget
- Production Budget
- Overhead budget
- Labor Budget
- Operating Budget
- Financial budget
- Capital Budget
- Sales Budget
- Static Budget