How To Plan Budget For Business

How To Plan Budget For Business-25
This spreadsheet contains two sample business budgets designed for companies providing services or selling products.

This spreadsheet contains two sample business budgets designed for companies providing services or selling products.

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A business budget helps you decide whether you can grow your business, give yourself a raise, purchase additional inventory and assets, and whether you may be able to avoid bankruptcy.

It's possible to modify a personal budget spreadsheet to apply to a business, but if you are using our Income Statement Template, you'll want to use the business budget spreadsheet so that you can create a budget that is parallel to your income statement.

This worksheet is a variant of the above business budget, with sales and business expenses broken down by month.

This is helpful for budgeting quarterly expenses and other business expenses that occur at specific times of the year.

You might notice in the illustration above the switch at the bottom of the Live Plan cash assumptions, for inventory.

Service companies don’t typically have to manage inventory, so this is a switch that is either on (for product businesses) or off (for service businesses).

The result is in the illustration here: Obviously cash is vital to business, and cash flow is vital, so this is a critical component of every lean business plan.

Just as it did with the Gross Margin for the sales forecast direct expenses, the Live Plan Benchmarks view also helps you compare your cash assumptions to industry standards: Don’t think the cash flow comes out fine the first time you do your Live Plan projections.

And with payments, increase your purchases on credit, and you increase your cash balance. You may be tempted to try to divide your receivables flow into categories of customers, or make allowances for special customers, but on the long term that doesn’t work well. Don’t expect your estimates to be exactly right for every month, and remember the goal is to set assumptions you can track during your monthly review and revision session. Sales on credit are the rule with business-to-business sales, so if you sell to businesses, play it safe and put 100% sales on credit.

Increase the days you wait to pay, and, there too, you increase your cash balance (and make your vendors unhappy, and possibly hurt your credit rating, but that’s for a different discussion). If you sell to a mix of business and consumers, or you sell to some consumers on credit, then think it through.

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