Skip to the content

Get A Quote

More Than AccountantsMore Than Accountants
  • Who We Help
    • Sole Trader Accounting
    • Small Business Accountants
    • Limited Company Accountants
    • Partnership
    • Limited Liability Partnerships
    • Contractor Accountants
    • Xero Accountants
  • Online Accountancy Services
    • Company Accounts
    • Tax Returns
    • VAT Returns
    • Bookkeeping Services
    • Financial Reports
    • Payroll Services
  • Knowledge
    • Blog
  • Contact Us
  • Who We Help
    • Sole Trader Accounting
    • Limited Company Accountants
    • Partnership
    • Limited Liability Partnerships
    • Contractor Accountants
  • Online Accountancy Services
    • Company Accounts
    • Tax Returns
    • VAT Returns
    • Bookkeeping Services
    • Financial Reports
    • Payroll Services
  • Quote Online
  • Blog
  • Contact Us
Categories
Business Funding

How to Build and Use a Business Budget That’s Useful All Year Long

  • Post author By Daniel Rose
  • Post date April 22, 2020
  • No Comments on How to Build and Use a Business Budget That’s Useful All Year Long

Sometimes planning and maintaining a budget can be quite hard. There will always be cash flow problems, unforeseen events, and other issues that may come your way. Even if you have the most carefully planned business budget, there will always be some issues that will arise from time to time. Also, most of us will create a budget for business and personal use at the start of the year but will forget about them until the year ends.

Keep in mind that your business is not inactive, so your budget should not be either. So, what can you do to develop and manage a dynamic budget that can keep you on the right track throughout the year?

Why Is It Important To Have A Budget?

Table of Contents

  • Why Is It Important To Have A Budget?
  • Planning For The Success Of Your Business
  • What Are The Benefits of a Business Budget?
  • How To Create A Business Budget?
  • Essential Steps In Building A Budget
    • What Will Be Covered By Your Budget?
    • What Should You Include In Your Budget?
      • Predicted Cash Flow
      • Costs
      • Sales or Revenues
  • What Is The Purpose Of Creating A Budget?
  • Don’t Forget To Update Your Budget Every Month
  • Create Some Changes That Can Provide A Positive Impact
  • Be Ready For Some Unexpected Changes
  • Budget Performance Should Be Rewarded With Incentives

Budgets are extremely important for the successful operation of your business. They can help you in managing your costs, at the same time, they can help you in determining if you are accomplishing your profit goals. You will always be on the right course every month. Simply put, a budget includes all the details of your future purchases and expenses. A budget is simply a tool that can provide you with some control over things. For instance, by looking at your budget, you will know when is your peak season. Hence, you can allocate some money to buy more stocks so you can handle the sales volume. During the slow period, you could schedule an inventory or plan a vacation or a marketing activity.

Want to switch to More Than Accountants? You can get an instant quote online by using the form below. In a like for like comparison for services we are up to 70% cheaper than a high street accountant.

Generally, small business owners plan a budget by determining the profit that they want to make. Afterward, they will list all the expenses that are needed so they can achieve their goal. There are a lot of resources that you can find on the internet that can help you in creating a budget for your business.

Planning For The Success Of Your Business

As a business owner, you can easily get distracted by your day-to-day problems and sometimes you forget about the bigger picture. However, business owners who have successful businesses spend time building and managing budgets. They examine their business plans regularly and keep track of their finance and performance.

In order to grow your business, you must have structured planning. This can help you in reducing your expenses, improving your returns on investment and increasing your profits. Even if there is no formal process, most business owners perform their activities based on their business plans. For instance, in improving their cash flow and profit, in beating their competitors as well as in growing their business.

Transforming these things into a process that can help you in managing the development of your business does not have to be difficult. The most important thing is your budget or business plan should be dynamic and everyone in the organization should get involved.

What Are The Benefits of a Business Budget?

Business owners can enjoy a lot of benefits from creating a business budget. First of all, it can help them in managing their money effectively. Additionally, they can assign suitable resources to every project. If you want to improve your decision-making and fulfill your objectives, then you should draw up a business budget. By constantly monitoring your performance, you can easily recognize problems even before they happen such as facing cash flow challenges or the need to increase finance. A business budget can even be used as a motivation for the staff. Additionally, it can also help you plan for the future.

How To Create A Business Budget?

The key to a successful business is to create a budget that you can properly monitor and manage effectively. It can help you determine where to allocate your resources. In this way, your business will still be profitable. Your budget should not be too complicated. All you need to include are your potential earnings and expenses during a particular period.

You can start by asking relevant questions. For instance, what are your predicted sales for a certain period? You need to be realistic with your answer and avoid overestimating since it might cause some problems in the future. How much is your estimated cost of sales? This will include the cost of materials as well as the payments for subcontractors. How much is the cost of your overhead or fixed costs? These overhead costs should be broken down based on their categories.

There are different types of expenses in your business. Perhaps you might need to divide your budget so you can allocate funds for each department. Be sure to add your personal expenses and don’t forget to incorporate an allowance for tax. After having these figures, you will know how much is your projected income and expenses.

By having a business budget, you will know how much money you will be earning. You can look for ways to reduce costs. It will be easier for you to figure out if you will be having some cash flow problems so you can do something about it.

After having a budget, as much as possible try to stick with it. But every now and then, you could review and revise it if you want to. Most often, successful businesses have their own rolling budget which they will continue to use.

Essential Steps In Building A Budget

There are essential steps that you need to follow in order to make sure that your budget is realistic and valuable.

  • By investing time in building a thorough and realistic budget, you will be able to manage it easily and effectively.
  • You can use the information from the previous year so you will have some ideas about the sales and costs of your company. However, it is also important that you have to consider your sales plans, where are you going to invest your resources and what are the changes that you have to apply based on your competitive environment.
  • Be sure that your budget is realistic. When creating a budget for your overheads, you can base it on your previous data, business plan, and developments in your operations.
  • It would be more valuable if you can associate variable costs and sales.
  • It is essential that your budget includes the necessary information so you can easily monitor your capital, sales, and costs. You can use accounting software to help you in handling your accounts.
  • If you have financial experts in your company, then you can ask them to give some estimations for your budget. For instance, figures for the production costs, sales targets, as well as for any specific projects. By comparing your estimates against theirs, you will be able to obtain a realistic budget. If you involve the right people on your budget, then the more they will be committed to meeting the budget.

What Will Be Covered By Your Budget?

You have to figure out how many budgets you need. Most small businesses only need one for their entire operating budget. This can give you some ideas on the amount of money that you need in running your business for a certain period, most probably for a year.

As your business starts to grow, you will be needing a lot of individual budgets, for instance, for sales, marketing, etc.

What Should You Include In Your Budget?

Predicted Cash Flow

Projecting your cash will provide you some ideas about your cash situation in the future. This type of budgeting is critical for small businesses since it can quickly recognize the difficulties that you might be experiencing. Be sure to check on this on a monthly basis.

Costs

Generally, there are three types of costs. These are fixed costs, variable costs, and capital costs. Fixed costs include salaries, rental fees, etc. Variable costs are raw materials, overtime expenses, etc. Capital costs pertain to the acquisitions of equipment, properties, etc. In order to make an accurate projection for your expenses, you can take a look at your last year’s records. You can also gather quotes from your suppliers.

Sales or Revenues

When it comes to projecting your sales or revenues, it will be dependent on your sales history as well as how effective your performance will be in the future.

Based on your sales and expenses forecasts, you can project your profit for the following year. This is very valuable since it can help you in analysing your margins, return on investment, and other important figures.

What Is The Purpose Of Creating A Budget?

A budget can be used for measuring the performance of your company. If your budget is dependent on your business plan, then you will have a financial performance plan. By reviewing your budget more frequently, it can serve a lot of purposes. For instance,  a budget can be used as a source of information to support management’s decisions for the next 12 months.

By making a comparison of your budget year after year, it will give you a chance to benchmark the performance of your company. For instance, you can compare your predicted figures against the previous years in order to gauge your performance.

A budget will serve as a representation of the sales and costs that are involved in every activity. It can also be used as a mechanism for effectively controlling and monitoring your business. This is very important most especially when it comes to analysing the variation between your real and budgeted income.

Don’t Forget To Update Your Budget Every Month

If your budget is working well on you, then you need to revisit it every month. You could update it and make some changes based on the performance of your business and the expenses that you have incurred for the previous month. Examine your sales forecast closely. Are there any signs that you need to make some changes to your budget? Should you add more stocks or additional staff to your company? Check your expenses. Are they as you predicted them to be? Or perhaps you need to reduce the cost in some areas so you can guarantee that you are on the right track.

Create Some Changes That Can Provide A Positive Impact

After making a review of your budget every month, you can try implementing some changes and observe its impact on your income and profits. For instance, if you think that you have a lesser budget in marketing then you can make some changes to your budget and observe what will happen over a month or after six months. On your succeeding review, check if you are getting a good return on the money that you spent on marketing based on the sales lead. Then you can use this data for your planning decisions in the future. It can help you decide where should you allocate your funds.

How about your receivables? Think of some ways that can improve your payment and invoice processing so you can maintain the cash flow in your business.

Be Ready For Some Unexpected Changes

You can also use your budget in responding to unexpected circumstances. For instance, one of your important customers reduces their own budget and as a result, they also decrease the amount of business that they do with you. Examine your budget and see how this decline in revenue can affect your cash flow. Can your business endure these abrupt changes? How long will it take before you can find a new client that can replace the one that you’ve lost? It is very important that you have to replace the revenue that you’ve lost as soon as possible. Determine the cost needed in marketing to help you obtain a new client.

Budget Performance Should Be Rewarded With Incentives

If you want everyone to focus on your budget, then one of the best things that you can do is to give them performance bonuses. Hence, at the start of the year, when you are planning your yearly budget, you need to set some targets for performance that can result to profit. Aside from this, you can also set other categories, for instance, maintaining lower expenses, the return on investment in marketing, and others.

Share this post

By Daniel Rose

Daniel is the co founder of More Than Accountants and an ACCA Chartered Accountant. He will be more than happy to help More Than Accountants clients implement any guides or strategies that he has posted to the blog. If you would like to learn more about becoming a More Than Accountants client you can quote online by using our Unlimited Accountancy Services Quoting Tool.

View Archive →

← Budget Guidelines the 502030 Rule → 6 Step Guide- How to Get a Business Loan – US

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

By Daniel Rose

Daniel is the co founder of More Than Accountants and an ACCA Chartered Accountant. He will be more than happy to help More Than Accountants clients implement any guides or strategies that he has posted to the blog. If you would like to learn more about becoming a More Than Accountants client you can quote online by using our Unlimited Accountancy Services Quoting Tool.

View Archive →
  • 0161 804 0808
  • Get An Online Quote

EXCELLENT
Based on 214 reviews
Google
Kai W
Kai W
2025-02-12
Excellent accounting service! Very professional and quick at answering my queries. I really enjoy working with them.
Kandice Morris
Kandice Morris
2025-01-30
I cannot recommend More than Accountants highly enough! From the first meeting, I was impressed by their professionalism, knowledge, and dedication to helping clients succeed. They took the time to understand my financial situation and goals, and they provided tailored advice that has significantly impacted my financial health. Their attention to detail is truly commendable. I have always felt confident knowing that my accounts are managed with the utmost precision. Not only did my accountant (Hasrat ) do my taxes promptly, but he also got me a refund!! More than accountants are always available to answer questions and respond quickly, making what could be a stressful process quite manageable. I’m incredibly grateful for their guidance and support, and I look forward to many years of continued collaboration!
Misha Cunningham
Misha Cunningham
2025-01-30
After a bit of a rocky start with this accountants, they now deal with all 4 of my active companies. And, the major contributing factor in this is the excellent care and attention that I receive from Arshiya. I actually insisted that she be kept as my main point of contact in my dealings with More than Accountants and I feel extremely looked after. On another note, their unlimited package is quite expensive, but in my eyes it's worth it as they handle everything, meaning I don't have to worry about anything. Plus, I know if I need anything in the interim it's simply covered in the fees already without needing to fork out extra here and there.
Brian Roache
Brian Roache
2025-01-20
More than accountants have provided an affordable accountancy service to my limited company Reveldrive Limited and dealt with all the formal tax returns and my personal tax. Hasrat has been my contact during the years with them and knows his subject very well.
Henry Dean
Henry Dean
2025-01-13
Wonderful, friendly and talented accountants. They make running my limited company a breeze. I can always rely on them to respond straight away. My accountant Aqsa is a star!
James Brennan
James Brennan
2025-01-13
Waleed, Arshiya and the rest of the team at More Than have been handling our accounts & carrying out payroll duties since March 2024. Since then they have provided the very best service possible, every task they have carried out for the company has been totally faultless and stress free. The attention to detail in assisting the company in the best way possible is highly appreciated and we would recommend them to all companies seeking a professional accountant company
Jade Moon
Jade Moon
2025-01-03
Great accountancy firm. The team are super responsive, nothing is too much trouble and they support small business owners really well.
Cedric PISTOL
Cedric PISTOL
2024-12-31
Very pleased with the support provided by Atif Mahmood & Abdul Moiz, thank you for your patience and your prompt actions!
Stephen Bond
Stephen Bond
2024-12-24
Highly recommended, Waleed is so personal and helpful in all questions asked we started 2 years ago with MTA and together improving year on year.

Company

  • Our Approach
  • Quote Online
  • Contact Us

About the blog

The blog posts are brought to you by More Than Accountants employees and we occasionally allow guest posts that we think could benefit our customer base.

Feel free to contact the poster of the blog for help interpreting or implementing their posts..

Categories

  • Accountancy News
  • Accountancy Software
  • Announcements
  • Business Funding
  • Business Practice
  • Business Tools and Process Automation
  • Company News
  • Customer Relationship Management (CRM)
  • Entrepreneurship
  • Industry News
  • Marketing
  • Uncategorised

Recent Posts

  • Bookkeeping for Beginners: 9 Basic Concepts to Get You Started
  • Bookkeeping Packages Guide
  • What is Double Entry Bookkeeping?
  • Difference Between Accounting and Bookkeeping
  • Xero Training (Talk About How, etc.)

Recent Posts

  • Bookkeeping for Beginners: 9 Basic Concepts to Get You Started
  • Bookkeeping Packages Guide
  • What is Double Entry Bookkeeping?
  • Difference Between Accounting and Bookkeeping
  • Xero Training (Talk About How, etc.)

More Than Accountants is a national online/telephone based accountant.

Head Office
More Than Accountants
Burnden House,
Viking Street, Bolton
Lancashire, BL3 2RR

Telephone:
0161 804 0808

[mnky_list_item icon_fontawesome="fa fa-phone" last_item="last" icon_color="#eeee22"]202-555-0120[/mnky_list_item]
[mnky_list_item icon_fontawesome="fa fa-map-marker" last_item="last" icon_color="#eeee22"]4982 Parkway Street, Los Angeles, CA 90017 [/mnky_list_item]
[mnky_list_item icon_fontawesome="fa fa-clock-o" last_item="last" icon_color="#eeee22"]8AM - 5PM Weekdays[/mnky_list_item]
© 2021 More Than Accountants Limited More Than Accountants is a limited company registered in England under company number 09974015. Our companies house registered office is: More Than Accountants, Burnden House, Viking Street, BL3 2RR. Content is for general information only. Always take advice. FacebookTwitter

Resources

Knowledge Base

How Much Does an Accountant Cost

What is UTR Number and How to Find It

Sole Trader or Limited Company

Bookkeeping Services

Daniel James Tax

Sitemap

Recent Blog Posts

  • Bookkeeping for Beginners: 9 Basic Concepts to Get You Started
  • Bookkeeping Packages Guide
  • What is Double Entry Bookkeeping?

Site

  • Who We Help
    • Sole Traders
    • Limited Companies
    • Partnerships
    • Limited Liability Partnerships
    • Contractors
  • Our Services
    • Company Accounts
    • Tax Returns
    • VAT Returns
    • Bookkeeping Services
    • Payroll Services
  • Contact Us
  • 0161 804 0808
  • info@morethanaccountants.co.uk

Registered office :
Nautica House, Ground Floor,
Waters Meeting Road, Bolton,
Lancashire, BL1 8SW

0161 804 0808
info@morethanaccountants.co.uk

Who We Help

  • Sole Traders
  • Limited Companies
  • Partnerships
  • Limited Liability Partnerships
  • Contractor Accountants
  • Small Business Accountants
  • Xero Accountants
Linkedin Youtube Facebook

Services

  • Company Accounts
  • Tax Returns
  • VAT Returns
  • Bookkeeping Services
  • Financial/Management Reports
  • Payroll Services

Resources

  • Knowledge Base
  • Blog
  • Quoting Tool
  • Accountancy News
  • Accountancy Software
  • Business Funding
  • Business Practice
  • Business Tools and Process Automation
  • Company News
  • Customer Relationship Management CRM
  • Entrepreneurship
  • Industry News
  • Marketing
  • FuturePay Terms And Conditions

Recent Blog Posts

Recent Posts
  • Bookkeeping for Beginners: 9 Basic Concepts to Get You Started
  • Bookkeeping Packages Guide
  • What is Double Entry Bookkeeping?
  • Difference Between Accounting and Bookkeeping
  • Xero Training (Talk About How, etc.)

©  2025 More Than Accountants Limited 

More Than Accountants is a limited company registered in England under company number 09974015.
Content is for general information only. Always take advice.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
Cookie SettingsAccept All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT