Budgeting

A budget outlines your organization’s financial and operational goals in order to create a business plan.

Budgeting is an important asset to help you measure and analyze your business’s performance. It can serve as a guide when deciding on aspects of your business such as: hiring new staff, cutting expenses, increasing marketing, etc.

When developing a budget, if your business is:

0-1 Year

You may refer to your financial forecast data for budget input

1+ Years

You may refer to data from previous years, noting where “you exceeded or fell short of last year’s budget”

Steps to develop a budget for your business:

Step 1

Write down assumptions about your business, such as what products/ services are/will be sold, their prices and volumes, the critical drivers for expenses. For example, number of staffs and locations, various marketing initiatives, etc.

Step 2

Once assumptions are listed, separate your budget in 3 parts:

Fixed costs: costs charged such as wages, rent, insurance, etc.
Semi-fixed costs: costs that can be scaled up or down depending on the state of your business, “using your monthly profit.” Therefore, if your business is doing better than expected, semi-fixed costs can be increased.
Variable costs: costs that are directly related to the production of a product like labor and materials, for example computers.

Step 3

Put your budget together (example of items you may include):

TIP

If you have an established business, take into consideration both income statement and cash flow statement. If you own a new business, focus solely on cash flow.

Hourly earning

Product sales

Investment income

Loans

Savings

Other

Rent/mortgage

Utilities

Government & bank fees

Salaries

Internet

Insurance

Advertising

Commissions

Other marketing costs

Travel & events

Printing services

Raw materials

Income Sources

Fixed Costs

Semi-Fixed Costs

Variable Costs

Computers

Furniture

Software

Office supplies

Download additional budget examples below:

Startup Budget (PDF)

Income vs. Expense Budget (PDF)

Business Plans

Business Counseling