Having a budget in place is essential for every small
business. It helps you track income and expenses, plan for the future, and make
confident financial decisions. Whether you’re just starting out or looking to
refine your existing budget, here’s how to get it right.
Understand Your Income
Start by working out how much money your business brings in.
Look at past sales, seasonal trends, and realistic growth projections.
Understanding your income patterns will help you plan with confidence and avoid
overestimating what’s coming in.
List Fixed and Variable Expenses
Identify your fixed costs—things like rent, software
subscriptions, and staff salaries—that stay the same each month. Then list your
variable expenses, such as raw materials, utilities, or marketing costs, which
can change month to month. Knowing these numbers helps you manage cash flow
more effectively.
Set Realistic Goals
What are you aiming for in your business—higher profits,
reduced debt, or expansion? A clear budget helps you set and track goals. Break
your targets into achievable steps, and regularly check in on your progress to
stay on track.
Plan for Emergencies and Seasonal Changes
Unexpected costs and quieter periods happen. Include a
contingency fund in your budget to cover emergencies or seasonal dips in
revenue. This safety net gives your business breathing space when things don’t
go as planned.
Review and Adjust Regularly
A budget isn’t something you set once and forget. Review it
monthly or quarterly to check your actual figures against your projections. If
something changes—like a supplier raising prices or sales increasing—adjust
your budget accordingly.
Use Budgeting Tools or Software
Budgeting software can make life much easier. Tools like
Xero, QuickBooks, or even a well-structured spreadsheet can help you track and
adjust your figures in real time. Choose a method that suits your style and
helps you stay organised.
Involve Your Team
If you have staff, involve them in the budgeting process.
They often spot issues or opportunities you might miss, and having their input
helps build a culture of financial responsibility across the business.
Get Professional Support When Needed
If budgeting feels overwhelming, don’t hesitate to seek help
from a bookkeeper or accountant. They can help you set realistic targets, avoid
common pitfalls, and provide insights into your financial performance.
A good budget gives you control over your finances and direction for your business. By taking time to create, review, and adjust your budget regularly, you’ll make smarter decisions, reduce financial stress, and increase your chances of long-term success.
Written on 22-12-2025
This article was written by Agnieszka - a professional bookkeeper with several years of experience in the financial service industry. Agnieszka works with Lukro Ltd, the accounting and bookkeeping company provides professional and friendly bookkeeping and business support services to individuals, sole-traders, partnerships, and small businesses. We help welders, plumbers, engineers, electricians, hairstylists, beauty therapists and many more.
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