Managing your business budget

As the lockdown continues businesses are continuing to operate in very challenging conditions as we start the new year. We wanted to share with you a few tips which we hope will help you to manage your business budget as this is essential to maintain financial health for your business.

Having a budgeting process is a good foundation for your business management, growth and in some cases important for the survival of your business. It gives you an overview of your business finances including your income and expenditures. It also helps with the achievement of long-term financial goals.

• The first step is to review how much income you will have coming in on a monthly basis. This may be easier to calculate for some businesses than others. If you have retained clients, then you may have a regular monthly income. If income is based on sales of products or one-off projects, you should be able to estimate what your potential income will be each month.

• Identify your fixed costs, these are the monthly expenditures that you have to pay each month. For example, rent, broadband, website hosting and payroll costs.

• You may also have variable costs throughout the year, by listing these you can forecast what your overall expenditures will be each month. These may include costs such as travel costs, marketing, raw materials or contractor fees.

• Do you have any off of expenditures planned for the year ahead? You may need to buy a new company car, new equipment or invest in a new website. Include these one-off costs in your budget as well.

Once you have identified all your income and expenditures you can list these in a spreadsheet or if you use accounting software (such as Sage, Xero, QuickBooks or FreeAgent) you can create a profit and loss account online.

If during the pandemic you accessed any loans or deferred your VAT make sure that you factor these re-payments into your budget.

This will give you a comprehensive view of your income and expenditures month by month. The ideal scenario is that you have more income than expenditures each month, so you are making a profit.

If you realise that you do not have enough income to cover all your costs, then you can start planning how you will tackle this. You may be able to reduce some of your expenses, for example by changing your utility provider or moving into smaller premises. Or you may need to increase your sales or put your prices up.

It takes time to create a financial forecast in this way, but it is time well spent, it will give you financial insights for the year ahead and help you to make decisions to help your business grow.

If you need any advice on budgeting please do contact us.  You can call 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it..