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Accounting | How To

How To Create a Small Business Budget [+Free Template]

Published June 20, 2023

Published Jun 20, 2023

REVIEWED BY: Tim Yoder, Ph.D., CPA

WRITTEN BY: Eric Gerard Ruiz, CPA

This article is part of a larger series on Bookkeeping .

• 1. Create a Budget Process
• 2. Determine Key Assumptions in Budgeting
• 3. Create the Sales Budget
• 4. Create the Inventory and Purchases Budget
• 5. Create the COGS Budget
• 6. Create the Sales & Administrative Budget
• 7. Create the Capital Budget
• 8. Create the Cash Budget
• 9. Assemble Proforma Financial Statements

Common Problems in Budgeting

Bottom line.

Creating a business budget is an important step in planning. A small business budget starts with creating the budgeting process, the operating budgets, such as sales, inventory and purchases, cost of goods sold (COGS), and sales and administrative, and ends with the financial budgets, such as cash, capital, and proforma financial statements.

To help you get started, we’ve provided a very simplified version of a budget spreadsheet to illustrate how information from each area of your business is combined to form an annual budget. We’ll discuss how to use this spreadsheet throughout our article.

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Budgeting is an important subset of managerial accounting. Read our small business guide to managerial accounting and learn how managerial accounting concepts can be applied in a small business setup.

Step 1: Create a Budget Process

The budget process shows how the different departments of the business create a budget. Without a process, budgeting would be chaotic, and it would result in inefficiencies. In the budget process, you need to consider the following:

• Budget period: When are budgets created, reviewed, implemented, and evaluated against actual performance?
• Budgeting method: How are budgets created? Is it created from scratch (zero-based budgeting)? Is it based on actual results with adjustments (incremental budgeting)?
• Budget involvement: Who creates the budgets?
• Budget committee: Who oversees and approves the budgets?
• Budget manual: What are the guidelines for creating budgets?

Budget Period

The first thing to consider in the budget process is the budget period. How long should budgets be prepared? When will it be implemented? The budget period can be any time before the next business year begins. Hence, you can create next year’s budget three months prior to the end of the current year.

The crucial periods for budget planning are as follows:

• Budget preparation : The time at which managers and heads create a budget for their department.
• Budget review and approval : The time at which top management will review and approve all lower-level budgets.
• Budget implementation : The time at which all concerned parties will act upon planned activities stated in the budget. This phase runs until the effectiveness of the budget lasts.
• Budget accountability : The time at which top management will assess if the business is meeting its budgetary goals. This phase runs intermittently during the year, such as monthly, quarterly, or semiannually, especially during performance evaluation and review.

As a small business, you need not be particular about the phases. You can modify the phases depending on small business needs.

Budgeting Method

There are four different types of budgeting methods, but for small businesses, we picked only two, as they are the most appropriate for the setup:

• Zero-based budgeting : This is a budgeting technique that starts from scratch. It doesn’t use information from past budgets. Instead, departments and managers need to justify every dollar in the budget without referring to past performance or past budgeting practices.
• Incremental budgeting : This is a budgeting technique that uses actual figures from the past years and adjusts with a certain percentage. For example, if actual sales last year is $20,000, the incremental budgeted sales could be 10 percent more or $22,000.

Budget Involvement

Small businesses must consider what kind of involvement is needed during the budgeting process, given that budgets can be used to measure the performance of departments and managers. There are two kinds of budget involvement—for small businesses, authoritative budgeting is suitable if the small business owner is heavily involved in daily operations. Alternatively, participatory budgeting applies if the owner delegates decision-making to managers.

1. Authoritative budgeting

Also known as top-down budgeting, this budget involvement strategy only includes top management in the budgeting process, where operating personnel and lower-level employees have little to no say in the budget. It takes less time to create since there are fewer employees involved.

However, some operating personnel and lower-level employees may disagree with top management’s estimates in the budget. At the least, this strategy creates discord between top management and operating personnel due to conflicting views. But if prepared appropriately, authoritative budgeting reflects the business’ vision, mission, and goals better.

2. Participatory budgeting

This is also called bottom-up budgeting, and this budget involvement strategy includes operating personnel and lower-level employees in creating a budget. It is a budget co-created by everyone involved or affected by the budget being created.

It enhances the relationship between top management and operating personnel since everyone has a say in the budget. However, this strategy can take time since more employees are involved in the budgeting process. Also, some lower-level managers can use this opportunity to insert some budgetary slack so that they look good during performance.

Budget Committee

The budget committee is responsible for compiling all lower-level budgets and assembling them into one package called the master budget and reviewing and approving budgets from different departments. For small businesses, the composition of the budget committee can be the small business owners, chief executive officer (CEO), treasurer, budget coordinator, and chief accountant.

The role of the budget coordinator is to reach out to lower-level managers and communicate the wishes of the budget committee. If you’re a family-grown small business, family members, including the small business accountant or finance officer, can be committee members.

Budget Manual

The first order of business of the budget committee is to create a budget manual, which outlines the budgeting process. Lower-level managers and department heads will use the budget manual when creating lower-level budgets. The budget committee may also set specific budget formats and deadlines.

A budget manual standardizes the budgeting process—it ensures fairness and comparability among departments and managers. With this manual in place, you can prevent the instance of inserting unfamiliar line items in the budget or using different sources in forecasting budgeted figures.

The budget manual should include the following:

• Statements of budgetary purpose
• Budgetary activities, such as budget preparation, budget hearing and evaluation, budget approval, budget execution, and budget accountability
• Schedule of budgetary activities and deadlines
• Sample budgets
• Key assumptions used in budgeting

You can create a budget easily using QuickBooks Online. Its budgeting functions create budgets per account in the chart of accounts. Read our QuickBooks Online review for detailed information on our recommendation.

Step 2: Determine Key Assumptions in Budgeting

After performing the groundwork for budgeting, the next step is determining the key assumptions. These assumptions make it easy to prepare budgets since not all information is readily available until it happens. These assumptions are not arbitrary because they must be based on past experience and good business practices.

Examples of assumptions are:

• Sales forecast
• Selling price per unit
• Cost per unit
• Estimated discounts given to customers
• Estimated sales returns
• Desired ending inventory per month or quarter
• Number of raw materials used to produce one good unit
• Number of labor hours needed to produce one good unit
• Number of overhead hours (if any) needed to produce one good unit
• Inventory cost flow method used, such as first-in, first-out (FIFO), last-in, first-out (LIFO), or average cost
• Cash collection patterns
• Cash payments patterns
• Cash retention policies

Input your assumptions in the second tab of our downloadable spreadsheet. When done, all of the reports will automatically populate. It’s the quality of your assumptions that will determine if your budget is realistic. As you improve your budgeting process, you’ll come up with additional assumptions to include in the process.

Step 3: Create the Sales Budget

The sales budget is the first budget that should be prepared because almost all budgets will depend on the information in it. It is the responsibility of the sales department to forecast and create the sales budget of the company, and it is crucial that the department forecast sales reasonably using the appropriate forecasting method. Our article about sales forecasting discusses the method of sales forecasting and shows how CRM software can help.

Below is an example of the sales budget taken from our small business master budget template.

Sales budget

Step 4: Create the Inventory & Purchases Budget

There are two ways to call this budget: merchandising companies can call it inventory and purchases budget while manufacturing companies can call it production budget. However, the information shown in this budget remains the same. The inventory or production budget shows the number of units needed to meet the sales demand.

Inventory budget

The image above shows the sample inventory budget in our free template. One of our assumptions is that the business intends to keep 5% of next quarter’s sales forecast as current quarter’s ending inventory. In Q1, desired ending inventory is 500 units, which is 5% of 10,000 units of Q2’s sales forecast.

After determining the number of units needed, multiply them to the standard cost of inventory to get the total cost of inventory. The standard inventory cost is also the budgeted cost of inventory. Since some inventory prices fluctuate, setting standard costs makes it easy for us to budget.

When adding values in the total column, do not sum up the values in the beginning and desired ending inventory rows. Instead, the total beginning inventory in the total column should be the Q1 beginning inventory, while the total ending inventory should be the Q4 ending inventory.

Step 5: Create the COGS Budget

The next logical step after budgeting inventory and purchases is to determine the COGS. Through the COGS budget, we can estimate the level of COGS per quarter. This budget is necessary for preparing the proforma income statement.

Below is the COGS budget from our small business budget template:

COGS budget

Step 6: Create the Sales & Administrative Budget

The sales and administrative (S&A) budget presents the budgeted costs for sales expenses, office expenses, and administrative expenses. This is necessary for budgeting the salaries of employees and other fixed expenses. The image below shows the sales and administrative budget from our template:

S&A budget

Most expenses in this budget are fixed costs. That’s why the amounts are the same for every quarter. Manufacturing companies may also call this budget a “fixed overhead budget.”

Step 7: Create the Capital Budget

A capital budget shows all the planned capital expenditures during the year. In our capital budget example below, there are no figures because the sample company didn’t plan any capital decisions for 2024. However, we’ve included common capital decisions for you to fill out when you use our template. For instance, a bank loan is a capital inflow while the purchase of equipment is a capital outflow.

Capital budget

The capital budget in our downloadable spreadsheet does not auto-populate from the assumptions tab. Instead, enter your budgeted loans and purchases directly in the report.

Step 8: Create the Cash Budget

The last budget that you need to prepare is the cash budget, which shows all the cash inflows and outflows from all budgets. Almost all budgets above affect cash flow. For example, the sales budget can show all cash inflows from cash sales and subsequent cash collections from credit sales.

Cash budget

Accounts Receivable & Accounts Payable Schedule

Collections from accounts receivables (A/R) and payments of accounts payable (A/P) are integral parts of the cash budget. Creating the A/R and A/P schedules helps in computing the ending balance of A/R and A/P and the amount of cash collections and payments per quarter. Below are the supporting A/R and A/P schedules for our cash budget above:

A/R and A/P schedules

Step 9: Assemble the Proforma Financial Statements Based on Budgeted Figures

The ultimate result of the budgeting process is the proforma financial statements, which are the budgeted or projected results of planned activities. If the budget goes as planned, the actual financial statements should be near the proforma financial statements. Below are the proforma income statement and balance sheet in our small business budget template.

Proforma Income Statement

Proforma Owner’s Equity Statement

Proforma Balance Sheet

Budgeting helps businesses plan on future events and meet company goals. However, it is likely that you will experience difficulties and problems during the budgeting process. The four problems we’ll discuss are budgetary slack, goal incongruence, budget myopia, and standard setting.

Budgetary slack and goal incongruence occur when managers are not aligned with the business’s overall goals and objectives, while budget myopia happens when the business forgets to consider the impact of short-term decisions in the long run. Lastly, standard setting often poses a problem when standards are too high or ideal. Let’s discuss each of them in greater detail below.

Budgetary Slack

Sometimes, managers and heads can use budgets to preempt results to their favor. This unethical practice is called budgetary slack or budget padding. Budget slacks occur when managers underestimate revenue goals and overestimate expense goals and when the business follows the participatory budget involvement strategy.

When time for evaluation arrives, budget slacks will make the manager’s performance as exemplary. Managers tend to include budgetary slacks when top management is too strict and punitive whenever budgets aren’t met.

For example, the sales manager underestimates the sales forecast at $50,000 for the first quarter, knowing that they can achieve actual sales of $70,000. This example shows how budgetary slack can affect performance evaluation and create a false reflection of the company’s ability to generate revenue.

Goal Incongruence

Budgets are goals. When goals of management and employees don’t meet, the budget will not reflect the results that’s best for the business as a whole. Preventing goal incongruence enhances the quality of the budget. The goal of employees should be aligned with the business’s goals, and top management should provide opportunities for employees to pursue their career growth within the business.

Improper communication of business goals and ineffective leadership are the common causes of goal incongruence. As a small business owner or manager, you should show employees that you are committed to them with respect to their professional goals and that you expect them to align themselves with the business’s overall goals.

Budget Myopia

Budget myopia occurs when budgeting focuses only on short-term goals without considering how these goals will affect the company in the future. Managers become “myopic” in budgeting when they see budgets as measures for performance—they forget that the main objective of budgeting is to plan, organize, and manage the firm’s resources. As a result, budget realignments occur because there is a failure to plan future events.

Standard Setting

Another hurdle in budgeting is setting standards, which are tools for planning and controlling. If used inappropriately, they can cause problems in the budgeting process. It is important that you have to set your standards at a practical level.

Practical standards allow room for error or inefficiencies. It gives employees a chance to learn and improve their outputs without affecting performance. Unwise managers often impose ideal standards or standards that require optimum performance and perfection.

As a result, imposing ideal standards results in employee burnout, decreased productivity, and negative employee morale. Discouraged employees might also result in dysfunctional behavior that might be detrimental to the company.

Frequently Asked Questions (FAQs)

Why is budgeting important.

Budgets help in planning and managing business resources. Since plans and goals require an outflow of resources, budgets help the business determine the right amount of resources needed to achieve the goal.

Who should have an active participation in the budgeting process for small businesses?

The small business owner should have an active role in helping managers and supervisors craft their budgets. As the owner, you should guide your employees to align their goals with the business’ overall goals.

With our small business budget guide and template, you can create a small business master budget. We hope that the template will help you understand why budgeting is crucial to the planning, organizing, and controlling business operations.

About the Author

Find Eric Gerard On LinkedIn

Eric Gerard Ruiz, CPA

Eric is an accounting and bookkeeping expert for Fit Small Business. He has a CPA license in the Philippines and a BS in Accountancy graduate at Silliman University. Since joining FSB, Eric has used his expertise and authority in curating and writing content about small business accounting and bookkeeping, accounting software, financial accounting and reporting, managerial accounting, and financial management.

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Free business budget templates (PDF/Excel) + how to create

By Ken Boyd

September 8, 2023

Running your own business presents unique opportunities for you to be your own boss, bring your entrepreneurial vision to life, and direct your financial future. But to avoid being among the 20% of small businesses that fail within their first year, you’ll want to take every precaution behind the scenes.

Creating a business budget is an excellent first step for any new business owner. By taking a closer look at your assets, expenses, and financial goals, you can craft a better plan for the future of your booming business. And ideally, you can reap some of the monetary benefits.

Let’s take a closer look at how to create a business budget and discuss the benefits of budgeting. You will even find some helpful resources and a business budget template we hope you can leverage moving forward. With the right tools and processes, you can use business budgeting to your advantage.

• What is a business budget?

• Benefits of a budget for your business

• What’s included in a business budget?

• How to create a budget for a business

• Small business budget customization

• Budgeting best practices for business

 • Free business budget templates

Printable business budget template

Business budget template for excel.

• Business budgeting with QuickBooks

Stay in control of your cash flow

Explore the many ways to manage your cash flow with QuickBooks

What is a business budget?

A business budget is an outline of an organization’s revenue, expenses, and profit over a period of time—generally monthly, quarterly, or annually. A good business budget assigns a purpose to every dollar your business earns. For instance, some money might go toward bills or business growth. Others will help fund daily operational expenses and take-home pay for yourself and your staff.

Solid business budget planning will provide a road map for spending and earning. It’ll create a lens into your organization’s financial future and facilitate better decisions all around. Ready to get your business idea off the ground? You’ll need to consider startup costs. Wondering if you can or should purchase new equipment this year? Refer to your business budget plan.

Maybe you’re looking for ways to cut down on expenses. Your business budget can present a view of your financial health, including where you’re spending money and where you might benefit from cutting back. With better foresight, you can cultivate stronger business performance and improve earnings from the last quarter or the last year.

Benefits of a budget for your business

“A business budget is a financial road map to success, a vision of where you want to take your business for the upcoming 12 months,” the FDIC says . What’s more, research has suggested that business budgets offer the following benefits:

• They give business owners more freedom to run their organizations with confidence.
• They allow business owners to identify cash flow and spending problems.
• They empower business owners to have a greater sense of control and insight when dealing with financial challenges.
• They help business owners and decision-makers predict cash flow and identify trends.
• They demonstrate positive money management to lenders and investors.
• They give you the chance to identify and rectify problem areas quickly.

Bottom line: Consider a detailed budget one of your key business needs.

What’s included in a business budget?

A business budget takes into account an organization’s total revenue and expenses to reveal net profit (or loss). The FDIC says the best business budgets comprise the “nuts and bolts” of everyday revenue and expenses like:

• Average order amount
• Number of product orders per month
• Billable hours
• Average payroll costs
• Material expenses
• Rent, mortgage, and utilities

When building a business budget, business owners should bear in mind that output depends on input. Make sure you’re collecting accurate data points whenever you’re dealing with your business’s finances. A simple mathematical error or typo can lead to confusion or, worse, uninformed financial decisions.

How to create a budget for a business

Now you know what a business budget is, why it’s important, and the essential components. Let’s now take a look at the steps you need to take to create one.

1. Calculate all forms of income

Whether you’re optimizing your personal spending or building a business budget, your first step should be aggregating all of your forms of income. Your net income determines how much you can afford to spend. It also indicates your take-home pay and whether your business performance is growing or stagnating.

To find out how much money your business is bringing in, refer to your profit and loss statements. Depending on your business model, you may have several income sources, so be sure to include any and all revenue streams in this section.

2. Subtract your fixed expenses

Once you’ve added all of your business’s income together, you can subtract your fixed costs. Fixed costs are expenses that remain consistent throughout the year. Whether you pay bills monthly, weekly, or annually, you can expect to spend a set amount of dollars on each expense. These costs are easy to predict, so they’re easy to work into your budget. The one-off expenses, or variable costs? Not so much—more on that in a minute.

Examples of fixed expenses include:

• Commercial rent or mortgage
• Operational utilities
• Loan payments
• Insurance bills
• Employee salaries

Once you’ve tallied up your fixed expenses, you can subtract that number from the total income you calculated in step 1.

3. Subtract your variable expenses

In addition to your fixed costs, you might anticipate monthly operating expenses that may not always be the same amount. These variable expenses may be harder to predict, but you can refer to old receipts and invoices to estimate them.

Examples of variable expenses include:

• Material costs
• Commissions
• Billable staff wages (freelancers, outsourced work, etc.)

After identifying your variable expenses and estimating how much they cost each month, subtract the amount from your income.

4. Prepare for emergency and one-time expenses

Life is full of unexpected circumstances. As a business owner, you’re likely familiar with unexpected expenses. New equipment, hiring expenses, and unplanned events can add up, so it’s wise to plan ahead as much as you can.

You can’t predict when you’ll need to pay for an emergency expense or how much it might cost, but you can set aside a cash reserve to lessen the burden.

5. Create a profit and loss statement

You’ve accounted for your income and fixed, variable, and emergency expenses. Now you can better understand your business finances by creating a profit and loss (P&L) statement. A P&L statement is a high-level overview that shows whether your organization is profitable or in the red.

When you add up all of your income then subtract your total expenses, you should have a positive or negative number. A positive number indicates that you’re in the black and, therefore, making money. A negative number indicates that you’re in the red and, therefore, burning a hole in your pocket.

Your P&L statement serves as a baseline for creating your business budget. You can access your profit and loss statement, track trends, monitor invoices, and more from your QuickBooks account.

Keep in mind that your profit and loss statement may not always show you the results you want. But with better business budgeting and forward thinking, you can set yourself up for a brighter and more profitable future.

6. Draft your business budget

After reviewing your P&L statement, you’ll have a better idea of where you’re spending your money—and if you’re spending responsibly. With this data in mind, you’re ready to draft your business budget for the next year, quarter, or month. Most businesses opt for quarterly budgets.

A basic budget outlines your expenditures and designates limits for each over a given period. This outline can help you determine whether you’re earning and spending within your abilities. With QuickBooks, you can easily glean insight into spending patterns and assess where your business stands financially.

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Track and manage your whole financial picture in one place - from bank transactions, expenses and beyond.

Small business budget customization

Every small business has a niche, workflow, and financial goals. So it’s important to remember that there’s no one-size-fits-all approach to business budgeting. As you learn how to build a business budget and experiment with the strategies you’ve learned, consider the following:

• Seasonality may affect customer buying behaviors, depending on your business type. Consider these fluctuations in profit and expenses as you plan your budget.
• If you run an e-commerce business, beware of hidden costs like shipping fees, website upgrades, and point-of-sale expenses.
• Budgeting for a startup can be especially challenging because they’re typically much more limited on data and performance history. But accurate accounting software and conservative estimates can help you improve your business budget year after year.
• If you run a service-based business, you’re working with more estimates than a product-focused business. Keep an eye on trends to make sure your budget has plenty of wiggle room.

Budgeting best practices for business 

A great business budget creates a clear connection between your day-to-day operations and financial resources. It can help you navigate tough business decisions and even help you identify areas for growth. But an effective budget doesn’t happen overnight. As you create and reflect on your business budget, keep these small business budget best practices in mind:

• Consider how every change in expenses or income will trickle down to your budget. Hiring a new employee doesn’t just mean you’re adding another salary but can also translate to changes in payroll taxes, benefits, and other expenses. Any time you adjust your business budget, consider the consequences.
• Make sure that you’re budgeting for all expense categories , including fixed, variable, and emergency expenses. Anticipating these costs can help you balance your business budget and plan ahead. You can track your business expenses effortlessly and accurately using QuickBooks.
• View your business budget as a living document. Financial circumstances change, and the unexpected happens. Your business should always be prepared to weather the storm. Review your financial statements regularly, reconsider your costs and spending, and refine your business budget as necessary.
• Set goals but avoid wishful thinking. Use your bookkeeping records to determine what might transpire over the next month, quarter, or year. But ultimately, it’s a better idea to be conservative with your budget than to expect the best-case scenario.
• Look out for ways to cut costs and create growth. As a business owner, it’s up to you to position your business for greatness. Break down your finances into areas of success and room for improvement. Spotting opportunities to improve your business finances can make your organization more profitable and sustainable in the long run.
• Keep your money organized with categories or envelopes. A business bank account that allows you to categorize or bucket your money makes it easier to stick to your budget plan and see at a glance where your finances stand. Use Envelopes in QuickBooks Money to organize your budget and hit your savings goals sooner.

Free business budget templates

If you’re just getting started with budgeting for your business, these templates are a great medium for learning the process. We invite you to create copies, download, edit, and print these business budget templates.

Use this editable and printable template to create a quick and easy budget for your business: 

Use our free Excel template to develop a budget for your business. The template uses an example budget from an imagined business, Widget Inc., to help guide you through the process of creating a business budget

How to use the Excel budget template

1. enter prior year information.

Input the year-end balance sheet and income statement into your Excel template.

Equity is the difference between assets and liabilities—the true value of your business. The $10,000 net income in the income statement increases equity in the year-end balance sheet.

2. Forecast future sales and costs

Next, we’ll make some assumptions for the upcoming year. In this example, Widget Inc.’s budget accounts for changes in sales, cost of sales, employee payroll costs, and other expenses.

Some accounting transactions, however, are unusual and cannot be included in a budget. For example, Widget Inc. had a $5,000 loss on the sale of equipment in the prior year.

Widget Inc.’s primary business is manufacturing and selling widgets, and the sale of equipment is not part of its annual budget. Accountants refer to these transactions as non-operating income and losses because day-to-day business operations don’t generate them.

3. Create a budget income statement

Widget Inc. produces a budget income statement using the assumptions in step 2. Note that the Widget Inc. budget has a line item for gain or loss on sale, other revenue . While the company may have an actual transaction in the category, this line has a zero budget.

4. Create a budgeted balance sheet using assumptions

The budgeted balance sheet includes assumptions that address each of the line items in the report. The budget provides percentage increases or decreases from the prior year, and 2 categories have no change.

5. Create a budgeted cash roll-forward for January

A cash roll-forward report lists your beginning cash balance, expected cash inflow and outflow, and your ending balance in cash for each month of the year.

The balance sheet and the income statement are financial statements , but the cash roll-forward is an informal internal report. The statement of cash flows is generated as part of your financial statements, but a cash roll-forward is more useful for budgeting purposes.

Business owners should create cash roll-forwards last because they need a cash projection for each month. Step 5 presents the cash roll-forward for January. You’ll see that the beginning of January cash balance ($10,000) is the year-end cash balance in the prior year’s balance sheet.

The majority of cash collections are from sales and the bulk of cash payments are for inventory. When a business sells inventory, the dollar amount transfers to the cost of sales, which is the largest expense in the budget. So it makes sense that the biggest cash outflow is for inventory.

Widget Inc. assumes that cash received for sales and the cash paid for inventory will be evenly distributed over 12 months. In reality, the payments will be uneven, but the cash inflows and outflows can be difficult to predict by month.

The budget also includes miscellaneous receivables collected in cash and other cash payments, such as payroll costs.

6. Budgeted cash roll-forward for February, other months

The beginning cash balance for February ($10,500) is the ending cash balance for January, and this connection applies to each month of the year. The February cash budget uses some of the same assumptions for sales and inventory purchases. The ending cash balance for February is also the March beginning cash balance.

Widget Inc. continues this same cash roll-forward process until the company has a cash budget for each month.

Business budgeting with QuickBooks

Building a business budget can feel like an overwhelming process, but it’s an essential one if you want to have an edge on the competition, maintain financial stability, and move your business forward.

QuickBooks features tools like business banking that automatically matches to your books , a business debit card integrated with your accounting software, and budget envelopes, making it easy to manage your business finances. Explore our product features to learn more.

Ken Boyd is a co-founder of AccountingEd.com and owns St. Louis Test Preparation (AccountingAccidentally.com). He provides blogs, videos, and speaking services on accounting and finance. Ken is the author of four Dummies books, including "Cost Accounting for Dummies."

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The Best Free Business Budget Templates in 2024

Published: July 18, 2024

Business budgets are a source of truth for your income and expenses. That includes all the money you spend — from A/B testing your marketing campaigns to your monthly office rent.

In my roles, I’ve needed to create budgets for whole projects and smaller writing projects.

While organizing the numbers may sound difficult, I’ve found that using a business budget template makes the process simple. Plus, there are thousands of business budget templates for you to choose from.

In this article, I’ll share seven budget templates that can help organize your finances. But first, you’ll learn about different types of business budgets and how to create one.

Table of Contents

What is a business budget?

Types of budgets for a business, how to create a business budget, how to manage a business budget, why is a budget important for a business, best free business budget templates.

Free Business Budget Templates

Manage your business, personal, and program spend on an annual, quarterly, and monthly basis.

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A business budget is a spending plan that estimates the revenue and expenses of a business for a period of time, typically monthly, quarterly, or yearly.

The business budget follows a set template, which you can fill in with estimated revenues, plus any recurring or expected business expenses.

For example, say your business is planning a website redesign. You'd need to break down the costs by category: software, content and design, testing, and more.

Having a clear breakdown will help you estimate how much each category will cost and compare it with the actual costs.

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Marketing Budget: How Much Should Your Team Spend in 2024? [By Industry]

How Marketing Leaders are Navigating Recession [New Data]

3 Ways Marketers are Already Navigating Potential Recession [Data]

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24 Ways to Spend Your Marketing Budget Next Quarter

Startup Marketing Budget: How to Write an Incredible Budget for 2023

10 Best Free Project Management Budget Templates for Marketers

6 templates to manage your business, personal, and program spend on an annual, quarterly, and monthly basis.

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

How to create a business budget

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Key takeaways

• A business budget is a financial plan that helps estimate a company's revenue and expenses, making it an essential tool for small businesses
• The steps to creating a business budget include choosing budget and accounting software, listing expenses and forecasting revenue
• If a business finds itself in a budget deficit, strategies such as cutting costs, negotiating with suppliers and diversifying revenue streams can help

As a small business owner, keeping your finances organized through a business budget is crucial to running a successful company.

Business budgeting involves creating a financial plan that estimates future revenue and expenses to make informed financial decisions, which can ultimately move the needle on your business’s financial goals and help it grow in profitability.

What is a business budget?

A business budget is a financial plan that outlines the company’s current revenue and expenses. The budget also forecasts expected revenue that can be used for future business activities, such as purchasing equipment. It sets targets for your business’s revenue, expenses and profit and helps you determine if you’ll have more money coming in than you pay out.

A business budget is an essential tool that helps you make wise business decisions. Without it, it’s difficult to gauge your business’s financial health.

What is the difference between a cash flow statement and a business budget?

A cash flow statement  (CFS) is a financial document that summarizes the movement of cash coming in and going out of a company. The CFS gauges how effectively a company manages its finances, including how it manages debt responsibilities and funds day-to-day operations.

It’s similar to a business budget in that you can see expenses and revenue. But while a budget gives a moment-in-time snapshot of your business’s financial performance compared to forecasts, the cash flow statement focuses on the actual inflows and outflows of money through your business.

Follow these steps to ensure a well-developed budget, from understanding your expenses to generating revenue and adjusting expenses to balance the budget.

1. Choose a budget and accounting software

First, you’ll want to store your expense and revenue information with accounting software to help you track your numbers and generate reports. Some software may also help you assign categories to the transactions, identify tax deductions and file taxes. Quickbooks is an example of accounting software.

Some business bank accounts also have accounting software built in, helping you stay organized by keeping your accounting and banking in one place.

2. List your business expenses

The next step in creating a small business budget is to list all your business expenses. Here are the types of expenses you want to include in your budget:

• Fixed expenses: Fixed expenses cost a fixed amount monthly or within the assessed period. Those costs include rent, insurance, salaries and loan payments.
• Variable expenses: Variable expenses can change monthly or over time, making them trickier to budget. This might include materials, direct labor, utility bills or marketing expenses.
• Annual or one-time costs: Some costs only occur a few times per year, while others you’ll only pay for as needed, such as buying new equipment. You still want to budget for these expenses by allocating a portion of your weekly or monthly budget toward one-time expenses.
• Contingency funds: Unexpected business costs can throw a wrench in your budget if not planned for. Such costs could include emergency repairs, necessary equipment purchases, sudden tax increases or unforeseen legal fees. To plan for these costs, you can create a contingency or emergency fund that’s separate from your operational budget.
• Maintenance costs: To allocate funds for maintenance costs, begin by including regular inspections and maintenance in your budget. Then, make sure to leave room for changes and unexpected maintenance costs.

3. Forecast your revenue

To estimate your future revenue, start by deciding on a timeline for your forecast. A good place to start is the previous 12 months. Your accounting software may also include revenue forecasting as one of its features, which can automate this step for you.

The timeline and your recent past growth can help you understand how much revenue you’ll generate in the future. Consider external factors that could drive revenue growth, such as planned business activities like expansion, marketing campaigns or new product launches.

You’ll also want to think about anything that might slow your growth. Many businesses experience seasonal fluctuations, which can impact your budget if you don’t plan for it. To account for these changes, list the minimum expenses required to keep your business running. Use your financial statements to understand these costs, and consider averaging out irregular expenses over the year to avoid surprises.

Ideally, your business should build a cash reserve during profitable periods to cover expenses during slower seasons. If necessary, consider various financing options, such as a business credit card or line of credit, that you can draw from to manage cash flow during peak or off times. Lightbulb Bankrate insight If you use debt financing to cover an expense, make sure that you can manage the debt in your regular business budget. Avoid going into debt when you don’t have a clear plan to pay it off or when you’re uncertain about your business’s profitability.

4. Calculate your profits

The next step in creating a business budget is to calculate your business profits. You can look at your total profits by calculating revenue minus expenses. That way, you see how much money you have to work with, called your working capital .

You should also understand your profit margins for each of your products and services, which can help you set prices or decide whether to offer a new product or service.

How to calculate your profit margins

To find out your gross profit margin, you’ll first need to calculate the gross profit. To calculate your business’s gross profit, subtract the cost of goods sold (COGS) from your total revenue. COGS includes all the expenses related to producing your products and services.

Once you have the gross profit, use the gross profit margin formula: (Revenue – COGS) / Revenue x 100. This will give you a percentage that shows how much profit you gain from that particular product after accounting for the product’s costs. Calculator Bankrate insight If your total product revenue is $50 and the total production costs are $35, your gross profit would be $15. To find the gross profit margin, you’d do the following calculation: ($50-$35) / $50 x 100 = 30%. The gross profit margin in this example is 30 percent.

5. Make a strategy for your working capital

Knowing what to do with extra revenue, which is your working capital, is crucial for managing your business finances and growth. Here’s how to get started with a financial strategy that propels your business goals forward:

• Set spending limits for different categories in your budget. When listing your expenses, you should have set a dollar amount for each category. You can estimate this by a monthly average or a general forecasted amount.
• Set realistic short- and long-term goals. These goals will motivate you to stick to your budget and guide your spending decisions.
• Compare your actual spending with your net income and priorities. Look at the areas you’re spending and consider whether you need to reallocate money to different categories. Consider separating expenses into business needs and extras.
• Adjust your budget and actual spending. Adjust your spending to ensure you do not overspend and can allocate money towards your goals. If you need to cut spending, consider the categories that are extras, such as types of marketing that you don’t know will generate a return on investment.

6. Review your budget and forecasts regularly

Finally, review your budget regularly. By frequently checking in on your budget, you can identify any discrepancies between your planned and actual expenses and adjust accordingly. This allows you to proactively handle any financial issues that may arise rather than reacting to them after they’ve become a problem.

Regular reviews also allow you to refine your budgeting process and improve its accuracy over time. Keep in mind that your budget is not set in stone but rather a tool to guide your financial decisions and help you achieve your business goals. Lightbulb Bankrate insight As you create your business budget and make business decisions, you can write or adjust your business plan to match your evolving priorities. The business plan outlines your business goals and the steps and strategies you’ll take to achieve them.

What to do if you have a deficit in your business budget

Finding a deficit in your small business budget can be alarming, but there are several strategies you can employ to handle this situation.

• Do a cash flow analysis. Begin by doing a cash flow analysis to review what your business is earning and spending money on. Identify potential problems and adjust the budget as needed to prevent overspending.
• Cut nonessential business costs. Cutting spending may involve eliminating nonessential costs and transferring funds from other categories to overspent categories. Your goal is a balanced or profitable budget.
• Negotiate with suppliers. Be transparent in your communications with suppliers and explain your quality standards and why you’re seeking cost reduction. Explore options for cost reduction that do not compromise quality, such as process improvements or ordering in larger quantities.
• Create a lean business model. By removing anything that doesn’t benefit your customer, your business can potentially save time and resources. Lean business models focus on continually improving processes and customer experience without adding additional resources, time or funds.
• Add revenue and diversify revenue streams. Raising revenue requires a realistic plan with measurable goals to increase sales and overall business income. You can also consider other products and services you could offer that would make your business profitable.
• Use financing to cover temporary gaps. Applying for a small business loan can help pay bills during an unplanned shortfall. Since this will add an expense to your budget, make sure you can handle the loan repayments and your regular expenses.
• Plan for a deficit. In some cases, a planned budget deficit might be a strategic decision, such as investing in new opportunities that promise long-term benefits.

Bottom line

Having a well-developed business budget is crucial for making informed decisions. You can effectively manage your small business’s finances by tracking and analyzing your business’s inflows and outflows, forecasting your expected revenue and adjusting your budget to stay balanced.

Even in the face of a budget deficit, there are various strategies you can use to keep your business profitable, including negotiating costs with your suppliers, assessing your business operations and offering new products and services.

With a solid business budget in place, you can confidently navigate financial challenges and drive long-term success for your small business.

Frequently asked questions

What are the benefits of a business budget, what are the components of a business budget, how do you calculate fixed and variable costs in a business budget.

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A How-To Guide for Creating a Business Budget

Amanda Smith

Reviewed by

September 23, 2022

This article is Tax Professional approved

Most business owners know how important a business budget is when it comes to managing expenses and planning for the future—but in a challenging economic environment like the one we’ve been experiencing, your business budget takes on even greater significance.

With inflation running rampant and the possibility of a recession looming, business owners need to be able to forecast their cash flow, manage their expenses, and plan for the future. Creating a detailed business budget is the first step.

Whether you want to revamp your budgeting method, or you’ve never created a business budget before, this guide will walk you through the process.

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What is a business budget?

A budget is a detailed plan that outlines where you’ll spend your money monthly or annually.

You give every dollar a “job,” based on what you think is the best use of your business funds, and then go back and compare your plan with reality to see how you did.

A budget will help you:

• Forecast what money you expect to earn
• Plan where to spend that revenue
• See the difference between your plan and reality

What makes a good budget?

The best budgets are simple and flexible. If circumstances change (as they do), your budget can flex to give you a clear picture of where you stand at all times.

Every good budget should include seven components:

1. Your estimated revenue

This is the amount you expect to make from the sale of goods or services. It’s all of the cash you bring in the door, regardless of what you spent to get there. This is the first line on your budget. It can be based on last year’s numbers or (if you’re a startup ), based on industry averages.

2. Your fixed costs

These are all your regular, consistent costs that don’t change according to how much you make—things like rent, insurance, utilities, bank fees, accounting and legal services, and equipment leasing.

Further reading: Fixed Costs (Everything You Need to Know)

3. Your variable costs

These change according to production or sales volume and are closely related to “ costs of goods sold ,” i.e., anything related to the production or purchase of the product your business sells. Variable costs might include raw materials, inventory, production costs, packaging, or shipping. Other variable costs can include sales commission, credit card fees, and travel. A clear budget plan outlines what you expect to spend on all these costs.

The cost of salaries can fall under both fixed and variable costs. For example, your core in-house team is usually associated with fixed costs, while production or manufacturing teams—anything related to the production of goods—are treated as variable costs. Make sure you file your different salary costs in the correct area of your budget.

Further reading: Variable Costs (A Simple Guide)

4. Your one-off costs

One-off costs fall outside the usual work your business does. These are startup costs like moving offices, equipment, furniture, and software, as well as other costs related to launch and research.

5. Your cash flow

Cash flow is all money traveling into and out of a business. You have positive cash flow if there is more money coming into your business over a set period of time than going out. This is most easily calculated by subtracting the amount of money available at the beginning of a set period of time and at the end.

Since cash flow is the oxygen of every business, make sure you monitor this weekly, or at least monthly. You could be raking it in and still not have enough money on hand to pay your suppliers.

6. Your profit

Profit is what you take home after deducting your expenses from your revenue. Growing profits mean a growing business. Here you’ll plan out how much profit you plan to make based on your projected revenue, expenses, and cost of goods sold. If the difference between revenue and expenses (aka “ profit margins ”) aren’t where you’d like them to be, you need to rethink your cost of goods sold and consider raising prices .

Or, if you think you can’t squeeze any more profit margin out of your business, consider boosting the Advertising and Promotions line in your budget to increase total sales.

7. A budget calculator

A budget calculator can help you see exactly where you stand when it comes to your business budget planning. It might sound obvious, but getting all the numbers in your budget in one easy-to-read summary is really helpful.

In your spreadsheet, create a summary page with a row for each of the budget categories above. This is the framework of your basic budget. Then, next to each category, list the total amount you’ve budgeted. Finally, create another column to the right—when the time period ends, use it to record the actual amounts spent in each category. This gives you a snapshot of your budget that’s easy to find without diving into layers of crowded spreadsheets.

See the sample below.

Pro tip: link the totals on the summary page to the original sums in your other budget tabs . That way when you update any figures, your budget summary gets updated at the same time. The result: your very own budget calculator.

You can also check out this simple Startup Cost Calculator from CardConnect. It lays out some of the most common expenses that you might not have considered. From there, you can customize a rough budget for your own industry.

Small business budgets for different types of company

While every good budget has the same framework, you’ll need to think about the unique budgeting quirks of your industry and business type.

Seasonal businesses

If your business has a busy season and a slow season, budgeting is doubly important.

Because your business isn’t consistent each month, a budget gives you a good view of past and present data to predict future cash flow . Forecasting in this way helps you spot annual trends, see how much money you need to get you through the slow months, and look for opportunities to cut costs to offset the low season. You can use your slow season to plan for the next year, negotiate with vendors, and build customer loyalty through engagement.

Don’t assume the same thing will happen every year, though. Just like any budget, forecasting is a process that evolves. So start with what you know, and if you don’t know something—like what kind of unexpected costs might pop up next quarter— just give it your best guess . Better to set aside money for an emergency that doesn’t happen than to be blindsided.

Ecommerce businesses

The main budgeting factor for ecommerce is shipping. Shipping costs (and potential import duties) can have a huge impact.

Do you have space in your budget to cover shipping to customers? If not, do you have an alternative strategy that’s in line with your budget—like flat rate shipping or real-time shipping quotes for customers? Packaging can affect shipping rates, so factor that into your cost of goods sold too. While you’re at it, consider any international warehousing costs and duties.

You’ll also want to create the best online shopping experience for your customers, so make sure you include a good web hosting service, web design, product photography, advertising, blogging, and social media in your budget.

Inventory businesses

If you need to stock up on inventory to meet demand, factor this into your cost of goods sold. Use the previous year’s sales or industry benchmarks to take a best guess at the amount of inventory you need. A little upfront research will help ensure you’re getting the best prices from your vendors and shipping the right amount to satisfy need, mitigate shipping costs, and fit within your budget.

The volume of inventory might affect your pricing. For example, if you order more stock, your cost per unit will be lower, but your overall spend will be higher. Make sure this is factored into your budget and pricing, and that the volume ordered isn’t greater than actual product demand.

You may also need to include the cost of storage solutions or disposal of leftover stock.

Custom order businesses

When creating custom ordered goods, factor in labor time and cost of operations and materials. These vary from order to order, so make an average estimate.

Budgeting is tricky for startups—you rarely have an existing model to use. Do your due diligence by researching industry benchmarks for salaries, rent, and marketing costs. Ask your network what you can expect to pay for professional fees, benefits, and equipment. Set aside a portion of your budget for advisors—accountants, lawyers, that kind of thing. A few thousand dollars upfront could save you thousands more in legal fees and inefficiencies later on.

This is just scratching the surface, and there’s plenty more to consider when creating a budget for a startup. This business startup budget guide from The Balance is a great start.

Service businesses

If you don’t have a physical product, focus on projected sales, revenue, salaries, and consultant costs. Figures in these industries—whether accounting, legal services, creative, or insurance—can vary greatly, which means budgets need flexibility. These figures are reliant on the number of people required to provide the service, the cost of their time, and fluctuating customer demand.

Small business budgeting templates

A business budget template can be as simple as a table or as complex as a multi-page spreadsheet. Just make sure you’re creating something that you’ll actually use.

Create your budget yearly—a 12-month budget is standard fare—with quarterly or monthly updates and check-ins to ensure you’re on track.

Here are some of our favorite templates for you to plug into and get rolling.

• The Balance has a clear table template that lists every budget item, the budgeted amount, the actual amount, and the difference between the two. Use this one if you’re looking to keep it simple.
• Capterra has both monthly and annual breakdowns in their Excel download. It’s straightforward, thorough, and fairly foolproof.
• Google Sheets has plenty of budget templates hiding right under your nose. They’re easy to use, and they translate your figures into clear tables and charts on a concise, visual summary page.
• Smartsheet has multiple resources for small businesses, including 12-month budget spreadsheets, department budget templates, projection templates, project-by-project templates, and startup templates. These templates are ideal if you’re looking for a little more detail.
• Scott’s Marketplace is a blog for small businesses. Their budget template comes with step-by-step instructions that make it dead simple for anyone.
• Vertex42 focuses on Excel spreadsheets and offers templates for both product-based and service-based businesses, as well as a business startup costs template for anyone launching a new business.

Budgeting + bookkeeping = a match made in heaven

Making a budget is kind of like dreaming: it’s mostly pretend. But when you can start pulling on accurate historical financials to plan the upcoming year, and when you can check your budget against real numbers, that’s when budgets start to become useful.

The only way to get accurate financial data is through consistent bookkeeping.

Don’t have a regular bookkeeping process down pat? Check out our free guide, Bookkeeping Basics for Entrepreneurs . We’ll walk you through everything you need to know to get going yourself, for free.

If you need a bit more help, get in touch with us. Bookkeeping isn’t for everyone, especially when you’re also trying to stay on top of a growing business—but at Bench, bookkeeping is what we do best.

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Business tips

7 free small business budget templates for future-proofing your finances

As a small business owner, you're likely balling with a lot more than your personal checking account. If you don't properly manage your business finances, there's more on the line than an overdraft fee—you now have an entire organization to account for.

Small business budgets are necessary to balance revenue, estimate how much you'll spend, and project financial forecasts, so you can stay out of the red and keep your business afloat.

But creating a small business budget template isn't a small task. Since I don't have a business to run, I did the heavy lifting for you—check out these free, downloadable templates for your small business budgeting.

Table of contents:

1. Static budget template

Best for: Multiple departments or revenue streams; Industries with complex operations

A static budget combines all the function-specific budgets a business uses into one. Typically, a static budget includes the following items (plus any other budgets your business might use):

Cash flow projections: Estimations of how much money will flow into and out of your business. They also help you decide when, how, and what you should spend money on.

Total expected spending: All estimated expenses, including labor and administrative costs. 

By integrating all of your budgets and projections, the static budget provides a full picture of your business's estimated expenses and financial strategy for the upcoming fiscal year. 

2. Overhead budget template

Best for: Service-based businesses

It's easy to forget about expenses that aren't directly tied to production, like delivery charges or utilities. But these costs exist (and can add up quickly), so you need an overhead budget. A detailed overhead budget template will include:

Administration expenses

It compares your budgeted amount to actual figures (warning: it may be a rude awakening) and can help improve accuracy for future financial planning. 

Predicting overhead spending helps you plan how to use other funds more practically too—if you know how much you'll spend on overhead, you can make better business decisions. For example, you'd know whether you can afford to invest money into other initiatives like adding a delivery service or upgrading equipment.

3. Multiple-project budget template

Best for: Project-based industries

Product-by-product COGS (cost of goods sold)

Labor costs

Equipment and resource costs

Indirect project expenses like travel

A multiple-projects budget establishes estimates for everything you need to get projects across the finish line. It also lets you track costs to ensure you're not spending more than you accounted for in the budget.

4. Startup budget template

Best for: New small businesses and startups

But unlike established small businesses, you don't have past financial data to base expenses on. That's why you need a startup budget to focus on expenses for your first year of business, including items like:

Funding from investors and loans

Licensing and permits

Logo and website design

Website domain

Business software

Security installation 

Overhead expenses

Capital expenses

5. Labor budget template

Best for: Larger businesses with lots of employees

Unless you're a one-person show, you'll need a labor budget. And even if you are a one-person show, it's good to know if you can afford to pay yourself. A labor budget breaks down all employee-related costs like: 

Payroll taxes

Contract labor

Break down employee costs into direct, indirect, fixed, and variable categories to clarify how your company allocates its resources. You can also consider different scenarios more easily when you understand the breakdown of labor costs.

For example, you can simulate the impact of adding or reducing staff in specific departments or assess the effects of different compensation structures on different teams.

An accurate forecast of labor costs ensures you can sustainably meet your staffing needs and can help you make informed hiring decisions. Down the road, it can also help you determine if you can afford to give your staff raises, bonuses, or additional benefits.

6. Cash flow budget template

Best for: Businesses with fluctuating income and expenses; Seasonal businesses; Retail

As important as it is to be mindful of how much money you're spending, you should also track how much money you're making . A cash flow budget helps estimate how money is flowing in and out of your business. It includes:

Starting balance (set at the beginning of the month, quarter, or year)

Projected cash inflow from all revenue streams

Estimated cash expenditures

Ending balance (calculated at the end of the month, quarter, or year)

This type of budget lets you proactively manage your resources, anticipate potential cash shortages, and strategize for growth. For instance, if you know you're only going to break even this year, you may wait on expanding or making a large investment. 

7. Administrative budget template

Best for: Businesses focused on streamlining operations

An administrative budget includes all those general expenses that the company as a whole needs to function. This type of budget accounts for: 

Depreciation expenses

Training and development

Communication expenses

Accounting fees

While you could technically include administrative expenses in an overhead budget and call it a day, a separate administrative budget gives more of an eagle-eye view of how well your business is operating. 

Without an eye on administrative costs, you may be spending unnecessarily or lose focus on areas where it'd be wiser to invest your money. In other words, you could be spending way too much on fancy pens when you should be saving up to upgrade your cash register. 

Periodic budget reviews

A budget isn't a "set it and forget it" deal. Regular budget reviews can help you stay on track with your financial goals and respond proactively to changing market conditions. 

You should compare your estimated budget to actual spending. Then you can see where you went over and where you can splurge more. Try to review your budget monthly, quarterly, and yearly.

Monthly: Compare actual performance against your budgeted figures for the month. Identify any deviations and look for insights into cash flow, sales trends, and expense management.

Quarterly: Dive deeper into performance over the last three months. Use trends to project revenue and expenses for the upcoming quarter and identify areas for improvement.

Yearly: Reflect on your long-term financial objectives for the fiscal year. Assess the effectiveness of your budgeting strategies, and set new budget targets for the upcoming year. 

How to design your small business budget plan

It's cliched but true: you gotta spend money to make money. But that's no excuse to start throwing cash at your business willy-nilly.

Budgeting forces you to prioritize your objectives, so you spend money on the things that matter most. Here's how to create a small business budget in four steps:

Identify your working capital for the budgeting period. Add up your current assets like cash, accounts receivable, and inventory. Then subtract current liabilities like accounts payable and short-term debt. The remaining amount is what you have left to cover your operational expenses during the budgeting period.

Separate business and personal expenses. If you haven't already, open a dedicated business bank account. This makes it easier to track, categorize, and analyze your finances.

Determine your fixed and variable costs. Make a list of costs that stay the same every month (fixed costs) and what changes (variable costs). These will change based on the purpose of the budget. For instance, a labor budget will only consider employee-related costs.

Calculate your total expenses. Add up all the costs for your business, including fixed costs, variable costs, labor, and any other applicable expenses. This total is how much your business needs to run. Any leftover money from your working capital can be allocated toward other business investments. 

Budgeting methods

If you've budgeted before and hated it, you may just have been using an ineffective budgeting method for your preferences. Here are a few budgeting methods to try instead: 

Traditional: This budget is set for a determined amount of time and uses last year's numbers as a benchmark. Once you set your budget, you don't change it unless you get approval for an adjustment.

Rolling: This dynamic approach spans a continuous time frame instead of a fixed time period. As each month or quarter passes, you add a new budget period and drop the oldest period. This lets businesses adjust projections based on real-time performance and market conditions.

Flexible: This budget changes along with your sales forecast. As real-time sales activity deviates from budgeted amounts, you recalculate the budget to reflect the new data. 

Small business budget FAQ

Still don't know where to start with your small business budget? Check out the answers to these common questions before you open a new Google Sheet.

What should a business budget include?

A business budget should include all income sources and expenses. Income sources could include projected revenue from sales, loans, or potential investor funding. Expenses may include items like office space rent, employee salaries, insurance, and marketing. Add anything that helps paint a full picture of your finances.

How much does the average small business startup cost?

What is the best free business budgeting software.

The best free budgeting business software will depend on what your business needs, but you can try apps like Mint or Wave. Or you can use a spreadsheet—scroll up for some free small business budget templates.

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Cecilia Gillen

Cecilia is a content marketer with a degree in Media and Journalism from the University of South Dakota. After graduating, Cecilia moved to Omaha, Nebraska where she enjoys reading (almost as much as book buying), decor hunting at garage sales, and spending time with her two cats.

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The Ultimate Guide to Budgeting for Small Businesses

By Andy Marker | March 4, 2022

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Creating a budget for your small business can be daunting, but doing so is essential for any successful company. We’ve rounded up expert tips and created a step-by-step guide for designing a strong small business budget.

Included on this page, you’ll learn why a budget is necessary for small businesses and how to create a budget using Excel . Plus, you’ll find a free, downloadable small business budget starter kit .

What Is a Small Business Budget?

A small business budget is a detailed outline of your financial status and projection, based on your historical financial data. It includes your projected income and expenses and is used to determine where your money is best spent.

Ahmet Yüzbaşıoğlu, the Co-Founder of Peak Plans , explains the importance of budgeting for small businesses: “The success of your business is determined by the quality of your decisions. If you want to make informed decisions, you must have a budget. A budget can help you create a plan for the future, whether it's for your company as a whole or for smaller departments. More importantly, [a budget] gives you guidelines with which to make decisions. If budgeting is not yet a part of your business strategy, it may be worth considering it as an option to provide you with insights that can help you to better plan for all aspects of your company.”

Do Small Businesses Need a Budget?

All businesses should have a budget, especially small ones with less room for errors. A small business can better weather periods of low income by knowing exactly where its money is going, forecasting sales, and identifying what can be cut when needed.

Stephen Light, the Co-Owner of Nolah Mattress , gives his take on why all small businesses should have a budget in place: “For small businesses, creating an effective budget is one of the most important tools to carve a successful path to profitability. Budgets are crucial for allocating funds efficiently and curbing any unnecessary or wasteful spending, [which is] an easy trap to fall into if you don’t have a framework or goalposts to stay within. Budgets are especially important to small business owners who might be using their personal funds.”

How Much Should a Small Business Budget Be?

Your budget should be based on historical financial data and not exceed what you expect to make in the budgeted period. Be realistic with your numbers and projections so that you do not find yourself in a position you cannot recover from.

Your budget should take into account all of your sources of revenue and all of your expenses, as well as an additional percentage for any emergencies or surprises. 

“Small businesses should absolutely be sure to pad their budget with contingency funds for unseen expenses,” suggests Light.

Larger businesses tend to make budgets annually , but for a small business, especially at first, it is a good idea to break down your budget monthly. To get started and identify a realistic monthly budget for your business check out our small business monthly budget templates for Google Sheets.

Importance of Budgeting in a Small Business

A budget helps a small business anticipate challenges, achieve and track financial targets, and secure investment opportunities. A well-considered budget should help a small business to encounter fewer unforeseen expenses and more opportunities. 

Below are some benefits of having a strong budget:

• Make Informed Decisions: A company can make more informed decisions more efficiently when they have a budget. A good budget is built on historical data and allows you to learn from your experience. “Budgeting is a great strategy for maintaining informed control of your business. You can use data insights to plan with greater clarity and organize all of your finances in one place. This allows your leadership team to have the necessary information to drive their decision-making processes more efficiently, which is a great way for your business to act on its data,” explains Yüzbaşıoğlu.
• Identify Growth Opportunities: With a budget in place, you can identify the most profitable projects for your company. Use your budget data over time to see where current resource allocation provides the most payoff. As Yüzbaşıoğlu says, “You can use budgeting to create assumptions about your business projections by measuring the effects of different investments on your business. For example, you can make conclusions about how much revenue an investment in sales will bring in with the information gathered from your marketing efforts. By evaluating different scenarios, you can consider your options for best achieving your goals. Observing different scenarios will soon help you find which strategies work best for your business.”
• Weather Leaner Business Times: All businesses should expect to encounter lean times. Having a budget in place can help you stay afloat by tracking which times are historically slow and by establishing an emergency fund. Knowing when to spend your money can be just as important as what you spend it on.

• Manage Risk: A well-crafted budget can help you to identify potential risks by gaining visibility into your spending. If you don’t track your money, it is easy to spend much more than you had planned (on an unsound investment). “Looking ahead is important for risk management ,” says Yüzbaşıoğlu. “Budgeting is a good way of looking ahead and contains similar methodologies as risk management. A budget allows you to look ahead and see how your activities in different areas will affect the company’s cash flow, earnings, and profitability.”
• Measure Performance: Having access to current and historical financial data from your business allows you to measure financial performance year over year. Without tracking this information, you cannot know which goals you are meeting. “Budgets are the most important tools that managers use to measure how well an organization is doing. Although budgets are commonly perceived to exist for financial purposes only, they can also be key tools to provide insight into how an organization and its departments are performing. Identifying variances — such as differences in expenses and costs and increase or decrease in sales and profits — will give a good overview to management about the performance of the company and its departments,” explains Yüzbaşıoğlu.
• Set Company Goals: A budget is a great place to start goal setting. Whether you aim to spend less over time or drive more sales, a budget gives you concrete numbers on which to base your financial goals. “When all parties are on the same page about the strategic goals of the company and the means of attaining them, it is much simpler to monitor success and work together to keep the organization on track to achieve its goals,” suggests Mains.

What Should a Small Business Budget Include?

A small business budget should include all income and expenses the business accrues over a given period. These numbers may change month to month, so it is important to either use an average, or to overestimate expenses and underestimate income.

Linn Atiyeh, the CEO and Founder of Bemana , highlights some major small business budget expenses that may not be immediately obvious. “[The expenses] need to include everything, from the employees themselves to the office spaces that they work in. They need to include technology, software, onboarding, training, client acquisition, insurance payments, marketing, product development, employee compensation, and any other anticipated costs,” she says.

The following bullets outline what to include in your budget:

• All Income and Expenses: Your budget should consider the entirety of your income and expenses. Note fixed and variable costs. It may also be beneficial to keep track of which expenses you can easily cut during lean times.
• Small Business Financial Plan: When creating your budget, consult your financial plan. If you do not have one, create an income statement and a cash flow statement . “You must incorporate your cash flow in your projections. Cash flow refers to the total amount of money that flows into and out of a firm. If you have positive cash flow in your firm over a certain period of time, this means that more money is flowing into your business than is leaving it,” says Mains. To learn more, read our how-to guide on creating a small business financial plan.
• Historical Sales Numbers: If you have them, use your historical sales numbers to project your income during the same time period in the future. If you don’t have historical data, start tracking it. As you continue to track this information, you will get a better idea of how much money your company is making and spending at different times of the year.
• Sales Forecasts: Create a sales forecast and use it to estimate your projected income. This information will help give you a target number for your budget.
• Emergency Fund: Any strong budget will include some wiggle room for emergencies and surprise expenses. Most sources recommend keeping three to six months’ worth of business expenses in an emergency fund — but remember that some money saved is better than none at all.
• Seasonal and Industry Trend Information: Most industries have slow seasons and busy seasons, and it is important to know when those times are. If you don’t have this information from your own business, a quick Google search can often tell you the answer.
• Growth Projections: Factor any expectations for major growth into your budget, such as opening a new storefront, buying new equipment, or hiring and training a new department.

How to Create a Budget for a Small Business

To create a budget for your small business, determine how much money your company spends and makes, and estimate how it will do so in the future. We’ve outlined how to create a budget in the steps below:

1. Gather Your Financial Information

This includes all income and expense information from previous years and any previous budget information you may have.

“To begin with, collect financial data, predictions, and market analysis to aid in the development of your small company's budget planning,” suggests Lattice Hudson, Business Coach and Owner of Lattice and Co . “To design your budget, consider the company's overall business and overall strategy in addition to the crucial financial data and analytics.”

2. Add Up Your Income

Use a small business budget template or spreadsheet to itemize and add up your income. Consider using a tool that tracks itemized income monthly so that you can more easily note changes over time.

3. Subtract Fixed Costs

Your fixed costs won’t change month to month, so they are the easiest to subtract from your income. Fixed costs might include rent, salaried employees, and non-variable utilities.

4. Determine and Subtract Variable Expenses

Not all costs are fixed, so you may need to do a little digging to determine some of your expenses. Calculate how much the company spent on hourly employees, variable utilities, and break room snacks and business lunches. 

“Variable costs are those that change from month to month depending on your company's success, [such as] consumption-based utilities, delivery charges, transport costs, and sales commissions. When your earnings are greater, you may spend more on variable costs, but when your earnings are lower, you should aim to cut back where you can,” says Hudson.

5. Profit and Loss Statement

Prepare a profit and loss statement from the data you’ve collected. Outline how much your company made and spent in a given time period. This will be the first indicator of what your budget numbers should look like.

6. Outline a Forward-Looking Budget

Create your budget using the numbers from historical profit and loss statements. Your income and expenses may grow or shrink over time, so it is important to calculate an average or to add a buffer to your expenses. Your budget should always have money left over for incidentals, as well as allocation to an emergency fund. 

Hays Bailey, the CEO and Founder of Sheqsy , recommends that you also include allocations for expansions or growth if you can see either on the horizon.

7. Review on a Schedule

Review your budget periodically. Track your income and expenses monthly, and update your budget as things change. “Over time, you will gain a better understanding of your company's operations and will be able to make more informed decisions regarding your budgeting plan,” says Hudson.

How to Create a Small Business Budget Spreadsheet in Excel

Microsoft Excel makes it easy to organize and chart your small business budget over time. The following tutorial lays out step by step how to use a template in Excel to add up your income and expenses and determine your business’s cash flow.

Gather and Organize All Relevant Financial Information for Your Business

To start your budget, you will need to gather and organize all of your financial information for the previous period. This includes income statements, expense reports, cash flow documentation, and any other relevant documents. If this is your first budget and you do not have these items, organize your bank statements, invoices, payroll information, and receipts. 

By organizing your data into these documents, each month becomes easier to track than the last. The more you stay organized, the simpler it will be to maintain your budget.

Download a Small Business Budget Template

• Download the small business budget template for Microsoft Excel.

Record Your Monthly Income

Record Your Monthly Expenses

Record Your Cash Flow

Save and Update Your Budget Regularly

Store your budget template on an accessible drive and update it regularly. Small businesses should update their budget and cash flow as often as possible to stay up to date.

Small Business Budget Example

Download Small Business Budget Example Microsoft Excel | Google Sheets

In this example of a small business budget, we’ve listed sample income, expense, and cash flow information using categories that are relevant to a small retail business. This template is fully customizable and can be used for a small business in any industry. You can also download a blank version of this template in the small business budget starter kit below.

Tips for Creating a Small Business Budget

Creating a budget for your small business can be daunting. To help you get started, we’ve gathered expert tips, from finding a mentor to setting realistic goals.

• Be Realistic: Keep all financial estimates in the realm of reality. Use historical financial data from your own past whenever possible. “My best tip is to avoid any wishful thinking or dreaming about best-case scenarios because it’s always better to use the real data from years past and to be realistic — you’ll avoid disappointment and tricky financial situations that way,” suggests Light.
• Note Changing Costs: Products and services don’t always cost the same amount every year. Be sure that the expenses listed in your budget are accurate at all times. “Be very mindful of the rapid rate at which prices can change and to get as many quotes as possible to inform your budget,” says Atiyeh. “On the first of these points, you may incorrectly assume that the amount you paid for a service in the past is still a good indicator of how much it would cost today. However, services are priced based on a multitude of factors, such as demand and market circumstances. Keep this in mind when creating a budget.”
• Find a Mentor: Doing so can cut down on the time it might take you to learn about business budgeting on your own. “Find someone who has experience in making budgets. Making a budget is technical and it requires experience if you want it to be done right. Of course, you are also allowed to do it on your own, but expect that it is going to take time and that you are in for lots of revisions,” warns Bailey.
• Overestimate Your Costs: Overestimating your costs helps ensure that your finances aren’t threatened when surprises come up or projects go over budget. You will be much better equipped to weather financial hardship if you’ve made room in your budget to respond to unexpected changes. “If your company works on a project-by-project basis, you are well aware that every customer is unique and no two projects will be precisely the same in their outcome. It is often impossible to forecast when a project may run over budget,” says Mains. “So much of running a company is about anticipating and responding to the unexpected. For small company owners, failure to predict an expenditure or its scale may be devastating and may cause the organization to become crippled before it has had a chance to mature and develop. Company owners must overestimate their costs to protect themselves from financial risk. This is a survival strategy that will assist business owners to protect themselves against danger and failure.”

What Specific Types of Businesses Should Consider when Budgeting for a Small Business

Budgeting for any business involves adding up income, subtracting expenses, and identifying where to spend and save money. Because different industries require different strategies, we’ve created a list of things to consider for specific small business types.

“One thing that is unique to small businesses as a whole is that there are so many different types of businesses. This means that there is no one-size-fits-all budget plan for small businesses. Each business should tailor its budget plan to its own specific needs and circumstances,” explains Lindsey Hyland, Founder of Urban Organic Yield .

• Seasonal Businesses: Some small businesses, such as those based around holidays or gardening, operate at a much higher business volume at certain times of the year. These businesses need to consider that their busy season will bring in much more income than their slow season(s). One way to tackle this is to take an average of your monthly income for the year and use that as your monthly operating budget. Don’t project based on the biggest numbers — use the smaller numbers or an average. For these businesses, it is especially important to establish an emergency fund so that a surprise expense during the slow season doesn’t become a catastrophe.
• Recruitment and Staffing: Businesses that deal with recruitment and staffing need to have a finger on the pulse of the businesses they work with. Do outside research into the growth or downscaling of other businesses to determine budget numbers for a given period. “Since my company is in the industrial and equipment recruiting industry, one unique challenge that we face is having to incorporate the needs of other businesses into our budget. For instance, it's important that we stay mindful of how much these businesses are upscaling or downscaling their operations at any given time, as that directly impacts the provision of our services,” says Atiyeh.
• E-commerce: Online businesses may have fewer fixed costs, such as rent, but may have more variable ones. Shipping costs, shipping zones, import taxes, and shipping supplies will change based on sales volume, so find an average or inflated number that works for these budget items. Companies that operate exclusively online should also invest in a well-made, working website and have a system in place for potential returns. These two things will help improve remote customer service, which can lead to more sales — and a larger budget — in the future.
• Nonprofits: Not-for-profit businesses are funded in a variety of ways, including through grants, donations, and dues. For these businesses, it is even more important to keep the budget as realistic as possible at all times, as there is commonly less money to move around. For more information and to help keep your budget balanced, peruse our list of free nonprofit budget templates .
• Inventory Business: Remember that it can be very expensive to keep large amounts of inventory on hand. Buying more of a product to sell can sometimes be cheaper because of the economy of scale, but ensure you have the space and capacity to hold on to things that don’t sell right away. Consider that you may need to spend more on rent and temperature control for a place to store these items.
• Custom Orders: The price of a custom order is not only the cost of the finished product, but a combination of factors. Determine a cost for your time and labor for conception, execution, materials, and delivery, and factor those into your expenses.
• Startups: Budgeting for a company with no existing financial history can be tough. Company owners will need to do research on the industry and use those numbers to create a rough estimate for their budget. When you are estimating a budget from scratch, be sure to overestimate your costs to mitigate risks. It is always a good idea to ask professionals and people with experience. Visit this list of free customizable startup budget templates to get started.
• Construction: Construction companies need to factor in the cost of all associated permits and insurance on top of all of the general costs of doing business. Permits and insurances may change based on the specific job you are doing, so it is critical to factor those costs into the relevant monthly budget. To help keep you organized, check out this list of free construction budget templates .
• Service: Businesses based on service need to put a larger portion of their budget toward staff training and retention. Better employees mean better service, and much of an employee's ability comes from their training. Additionally, you do not want to lose the valuable employees you spend time and money training, so these businesses need to factor in rising pay scales for more qualified staff.
• All Small Businesses: Do not forget to factor in taxes and fees involved in running your business. If you don’t know what they are, ask a professional for help. “There are a shocking number of people that do not make any self-employment tax payments to the IRS for lack of fear or know-how,” says Stevenson.

How to Manage a Small Business Budget

Manage your small business budget by spending within your means and saving money where you can. Make sure your budget is as realistic as possible, and update and revise it on a regular basis.

• Spend Within Your Means: Whenever possible, do not spend more money than you make. Use loans and credit wisely so as not to dig yourself into a hole. “Make do with what you have, start small with the free versions of software before you upgrade. Save for equipment. Make room in the budget later if you can’t afford it now,” advises Stevenson.
• Get Multiple Quotes: When you work with other businesses, it is in your best interest to get multiple quotes. You can use these quotes to negotiate the prices of goods or services that you need to run your own business, and save money in your budget. “By getting as many quotes as possible, you can build a more accurate understanding of the true prices of what you'll need throughout the period of time that you're budgeting for. By getting quotes from several sources rather than just one or two, you can make sure that your estimates are fair and accurate,” suggests Atiyeh.
• Revisit Your Budget Regularly: Circumstances can easily change from month to month or year to year. “The best way to stay on budget is to revisit the budget regularly. Budgets shouldn’t be set and then put away, they should be consistently reassessed and adjusted. If you’re committed to tweaking and allowing your budget to evolve with a watchful eye, you’re far more likely to stay within its bounds,” says Light.
• Be Realistic from the Outset: It is easy to get carried away with lofty goals and underestimated expenses. The closer your budget reflects reality, the easier it will be to stick to the plan. “Don’t underestimate expenses just to make your budget look conservative, because a budget that’s unrealistic is so much worse than not having a budget at all. It is misleading and it can cause lots of problems in the long run,” warns Bailey.

How to Do a Small Business Budget Efficiently

There are three key ways to help ensure that you manage your small business’s budget efficiently: Use the tools that are available to you, review your financial data on a schedule, and seek help when you need it.

• Use Software Tools: There are many software tools that can help you to create a budget. Many offer free trials so that you can find the one that works best for you. You may also find that a template suits your needs.
• Hire Help: Consider using the professional services of a financial advisor, or hire an accountant to manage your budget. For many businesses, hiring someone to manage the money is an inevitability that should be considered sooner than later.
• Create a Review Schedule: Small businesses should record budgets monthly. Track and store your monthly budget data so that you can reference it for future months and make changes as needed.

Small Business Budget Starter Kit

Download Small Business Budget Starter Kit

We’ve created this small business budget starter kit to help you get started creating and maintaining a budget. We’ve included a blank budget template from the example above, plus powerful cash flow and income statement templates to help keep you organized and on track. We’ve also included a customizable budget checklist so that you can ensure you’re tracking all of the information you need, every time.

Small Business Budget Template

Download Small Business Budget Template Microsoft Excel | Google Sheets | Smartsheet

Use this blank small business template to calculate your income, expenses, and a simplified cash flow. This powerful template adds up your itemized income and expenses each month, giving you a running total while in progress and a yearly total once completed.

Small Business Budget Checklist

Download Small Business Budget Checklist Microsoft Excel | Adobe PDF | Google Sheets

This customizable small business budget checklist will help ensure that you’ve included all income and expenses in your monthly budget. The checklist includes a list of some of the most common business expenses, but you can edit it as needed.

Small Business Income Statement Template

Download Small Business Income Statement Template Microsoft Excel | Google Sheets

Use this small business income statement template to track your company’s total income and expenses over time. Customize it to track by month, quarter, or year, and use it to complete the income and expense information on your budget template.

Small Business Cash Flow Statement Template

Download Small Business Cash Flow Statement Template Microsoft Excel | Google Sheets

Use this small business cash flow statement template to follow your cash income and expenses. Input your cash flow in the appropriate cell, and compare the current to the previous time period. The template will generate your total cash payments and ending cash position, which will help you fill in your budget template.

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How to create a business budget: 8 simple steps.

No matter the size of your business, a business budget is vital to planning and guiding your business’s growth. By understanding the fixed expenses of a company and accounting for the ebb and flow of work, a proper business budget can help your business maintain itself through the year and create protection around unplanned expenses through well allocated funds. In this guide, we'll walk you through the process of creating a business budget, outlining essential steps to help you manage your finances effectively.

What Is a Business Budget?

A business budget is a financial plan outlining projected revenues and expenses for a business during a specific period of time (most typically a year, though there are often monthly or quarterly reexaminations). Although there are variables throughout the year, a complete and accurate budget will serve as a blueprint for businesses in managing income and expenditures, guiding decision-making processes, and ensuring financial stability. 

What Should a Business Budget Include?

A comprehensive business budget’s purpose is to provide a business a holistic view of their financial health. When looking through bank statements, take note of those expenses that reoccur throughout the year and note those—as well as those unexpected expenses your company should instead anticipate. Key components to include are:

• Revenue Forecast: Anticipated income from sales, services, or other sources after deducting costs, taxes, and other fees.
• Fixed Operating Expenses: Costs associated with running the business, such as rent, utilities, salaries, and supplies.
• Capital Expenditures: Investments in assets like equipment, machinery, or property.
• Debt Service: Payments towards loans, credit lines, or other forms of debt.
• Taxes: Estimated tax liabilities, including income tax, sales tax, and payroll taxes.
• Contingency Funds: Reserves set aside for unexpected expenses or emergencies.
• Profit Targets: Desired levels of profitability, indicating the financial performance you aim to achieve.

Why Is Budgeting Important to a Business?

Budgeting plays a crucial role in the financial management of a business for several reasons:

• Resource Allocation: Helps allocate resources efficiently to prioritize essential activities and investments.
• Financial Control: Provides a framework for monitoring and controlling expenses to prevent overspending.
• Performance Evaluation: Facilitates performance measurement against predetermined targets, enabling timely corrective actions.
• Decision Making: Guides decision-making processes by providing insights into the financial implications of various options.
• Risk Management: Identifies potential risks and allows for proactive mitigation strategies to safeguard financial stability.

How Does Budgeting Help a Business?

Effective budgeting contributes to the success and sustainability of a business in numerous ways:

• Improved Cash Flow Management: Helps maintain adequate cash reserves to meet financial obligations and fund growth initiatives.
• Enhanced Profitability: Enables businesses to identify opportunities for revenue growth and cost optimization, leading to higher profitability.
• Better Resource Utilization: Ensures optimal utilization of resources by aligning expenditures with strategic priorities and operational needs.
• Increased Financial Transparency: Provides stakeholders with a clear understanding of the company's financial health and performance.
• Long-term Planning: Facilitates long-term planning by forecasting future financial requirements and setting achievable goals.

How to Create a Business Budget

Now that we’ve gone over the importance of a business budget, it’s time to understand the steps you need to take in order to create a comprehensive plan.

Gather Financial Information

Start by compiling relevant financial data, including past income statements, balance sheets, and cash flow statements. Analyze historical trends to identify patterns and make informed projections for the upcoming period.

Determine Your Financial Goals

Define clear, measurable financial goals aligned with your business objectives. Whether it's increasing revenue, reducing costs, or improving profitability, setting specific targets will provide a roadmap for your budgeting process.

Identify Revenue Sources

Identify all potential sources of revenue, including sales, services, investments, and other income streams. Estimate the expected revenue for each source based on market trends, historical data, and sales forecasts.

Estimate Expenses

Next, list all anticipated expenses, categorizing them into fixed and variable costs. Fixed expenses, such as rent and salaries, remain constant regardless of business activity, while variable expenses, like supplies and utilities, fluctuate based on demand.

Factor in Contingencies & Emergency Funds

Allocate a portion of your budget for contingencies and emergency funds to cover unforeseen expenses or revenue shortfalls. Building a financial cushion will provide stability and resilience during challenging times.

Balance Your Budget

Balance your budget by ensuring that projected revenues exceed estimated expenses. If there's a deficit, identify areas where you can reduce costs or increase revenue to achieve equilibrium.

Monitor & Track Your Budget

Regularly monitor and track your budget against actual financial performance to identify variances and deviations. Use accounting software or spreadsheets to update your budget and make adjustments as needed to stay on course.

Review & Adjust Budget Regularly

Review your budget periodically, ideally on a quarterly or annual basis, to assess its effectiveness and relevance. Adjust your budget as necessary based on changing market conditions, business priorities, and performance trends.

Contact Mowery & Schoenfeld for Help with Business Budgeting

Creating and managing a business budget requires expertise and strategic planning. At Mowery & Schoenfeld, we specialize in helping businesses develop robust financial strategies to achieve their financial goals. Contact us today to learn how our team of experienced professionals can assist you with business budgeting and financial management. 

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If you’ve just started your business, chances are that you have yet to create a budget. But it’s difficult to grow your business, meet any short- or long-term goals, or obtain outside investors or financing without accurate financial projections, which requires a small business budget.

Creating a budget also plays an important role in the the accounting cycle, which ensures that all financial transactions are properly accounted for.

And while the act of creating a budget may seem daunting, it’s much like creating a personal budget. You identify what you own of value (your assets), estimate your upcoming expenses, and account for and grow your revenue base.

If you know how to create an expense report or how to write an invoice, and are comfortable with the basics of bookkeeping, you can certainly handle business budget planning.

By creating, and more importantly, following a budget, you can eliminate wasteful spending, develop plans to expand your revenue base, and work toward your set goals in a productive fashion.

5 types of budgets for businesses

Budgets help businesses track and manage their resources. Businesses use a variety of budgets to measure their spending and develop effective strategies for maximizing their assets and revenues. The following types of budgets are commonly used by businesses:

1. Master budget

A master budget is an aggregate of a company's individual budgets designed to present a complete picture of its financial activity and health. The master budget combines factors like sales, operating expenses, assets, and income streams to allow companies to establish goals and evaluate their overall performance, as well as that of individual cost centers within the organization.

Master budgets are often used in larger companies to keep all individual managers aligned.

2. Operating budget

An operating budget is a forecast and analysis of projected income and expenses over the course of a specified time period.

To create an accurate picture, operating budgets must account for factors such as sales, production, labor costs, materials costs, overhead, manufacturing costs, and administrative expenses. Operating budgets are generally created on a weekly, monthly, or yearly basis. A manager might compare these reports month after month to see if a company is overspending on supplies.

3. Cash flow budget

A cash flow budget is a means of projecting how and when cash comes in and flows out of a business within a specified time period. It can be useful in helping a company determine whether it's managing its cash wisely.

Cash flow budgets consider factors such as accounts payable and accounts receivable to assess whether a company has ample cash on hand to continue operating, the extent to which it is using its cash productively, and its likelihood of generating cash in the near future.

A construction company, for example, might use its cash flow budget to determine whether it can start a new building project before getting paid for the work it has in progress.

4. Financial budget

A financial budget presents a company's strategy for managing its assets, cash flow, income, and expenses. A financial budget is used to establish a picture of a company's financial health and present a comprehensive overview of its spending relative to revenues from core operations.

A software company, for instance, might use its financial budget to determine its value in the context of a public stock offering or merger.

5. Static budget

A static budget, unlike a flexible budget, is a fixed budget that remains unaltered regardless of changes in factors such as sales volume or revenue. A plumbing supply company, for example, might have a static budget in place each year for warehousing and storage, regardless of how much inventory it moves in and out due to increased or decreased sales.

How to make a budget for your small business

One of the easiest and most accurate ways to create a budget is to review your revenue and costs for the past year and use those numbers when creating your new budget.

If your business is brand new, you’ll have to be a bit more creative, relying on obtaining numbers from the last few months, or researching similar businesses to obtain accurate estimates on revenue and expenses.

However you do it, learning budgeting for business is a lot easier than you imagine.

Step 1: Review your revenue

The first step toward creating a budget is to examine your revenue: not just the total for any given time, but specifics, such as months when revenue rose or dipped. This is particularly important for managing cash flow.

For instance, many retailers earn a large part of their yearly revenue in the months of November and December, while January and February typically are very slow in sales.

Knowing this information and including it in your budget can help you be better prepared for both the busy and the slow months.

Step 2: Take a look at your fixed expenses

As a small business owner, you should know what your regular monthly expenses are. If you know how to track business expenses such as rent, insurance, salaries, and utilities, you can create a budget.

Factoring these items into your budget helps to ensure that you’re accounting for these expenses properly.

Step 3: Factor in variable expenses

Whether in our personal lives or in business, we need to factor in variable expenses.

For instance, you may need to hire a temp if your office manager becomes unexpectedly ill. Other variable costs can include advertising and marketing, as well as postage or printing costs. Travel is another cost that may be planned (you know you’re going to a convention in May), but the final cost is not yet known.

Factoring in variable expenses can help with your bottom line. Don’t be conservative in estimating these costs, You’d rather they be too high, leaving you more money than expected for the month than the opposite.

Step 4: Include one-time and unexpected costs

While it may seem counterintuitive to include unexpected costs into your budget when they haven’t even occurred yet, you can safely assume that something unexpected will happen.

Your computer crashes and needs to be repaired, or worse, replaced. Or maybe your company car dies. These are both examples of unexpected costs. You can also plan for one-time costs.

For instance, you know you’ll be upgrading employee laptops in December. This allows you to plan for this expense in advance, ensuring that the funds should be available.

Step 5: Put all your information into a budget format

The ideal situation is to prepare your budget details in your accounting software application.

However, not all accounting software, particularly those designed for small businesses, include a budgeting feature. In that case, you can use Microsoft Excel or similar spreadsheet software to prepare your budget.

This Microsoft Excel spreadsheet can be used to create your business budget. Image source: Author

One of the main advantages of preparing a budget in your accounting software application is that you can track budget versus actual revenue and expenses. This lets you see how accurate (or not) your budget is, allowing you to perhaps make some mid-year adjustments.

Things to consider when making a budget for your business

Creating a budget is a great first step toward managing your business properly. However, it’s important when creating your budget that you do your best to make it as accurate as possible. There are numerous ways to do that, including the following:

1. Be conservative with revenue

When entering revenue totals, be conservative. At the beginning of the year, we're all optimistic. But be sure when you budget your revenue, you enter numbers that are as accurate as possible.

When planning for revenue growth, be conservative as well, perhaps budgeting for a 5%-10% growth for the year. If you exceed that level, great. You’ll have money to spare. But if you don’t, you’ll end up with a loss, which is not where you want your business to be.

2. Plan for growth

Planning for growth is important when calculating budget revenue, but you’ll have to account for added expenses as well.

Yes, if your business grows, your revenue will increase, but so will your overhead, as you increase advertising, add employees, and pay additional taxes. So when planning for business growth, be sure to factor in your increased expenses as well.

3. Unexpected expenses

This is an important one. One catastrophe can be disastrous for your business, particularly if you operate on limited cash flow.

When budgeting, just assume that your business will have at least one major unexpected expense during the year. If it doesn’t, great. You can bank that money for when the unexpected does occur.

4. Long-term goals

Before completing your budget, you might want to consider your long-term goals.

Do you plan on increasing your customer base each year by 5%? Perhaps you’re working out of your home, but plan on renting or buying a building for your business in the next year or two.

Be sure to factor that into your budget, and plan your income and expenses accordingly.

The best accounting software for tracking your small business budget

Not every accounting software application offers budgeting capability, but the following small business accounting software applications do.

If you’re looking to make the move to accounting software, or are looking for an application that allows you to create and manage a budget for your business, be sure and check out these applications.

Xero lets you easily create a budget using their Budget Manager feature. You can choose your start date for any budget, and prepare a budget of 3, 6, 12, or 24 months. Xero also allows you to compare any created budget to actual totals, to see how far under or over budget your company is.

The Budget Manager lets you choose start date, actuals, and period of time for each budget. Image source: Author

You can copy budget details from actuals for the prior year, copy data from an existing budget, or create a new budget from scratch. Adjustments can be made for each budget period, so you can adjust the amount each month to increase budgeted totals by a set amount or by percentage. This is a great way to budget for growth.

2. QuickBooks Online

The budgeting feature in QuickBooks Online lets you create a yearly budget easily. Just choose the correct fiscal year, click on the “Add Budget” button, and start entering budget details.

You can choose to pre-fill budget data using actual QuickBooks Online data or just create a budget from scratch. You have the option to create a monthly, quarterly, or yearly budget, and can choose to subdivide your budget by customer, class, or location, or just enter a single total into the appropriate fields.

The Budget Preview feature lets you preview your newly created budget for accuracy. Image source: Author

Budget data can be edited when desired, and to get a sense of your business performance, run the Budget vs. Actuals report, which displays current company performance to date.

3. Zoho Books

Zoho Books offers excellent budget creation capability, offering three ways to enter budget data:

• Auto-fill budget information based on current income and expense accounts
• Pre-fill from last year’s actual numbers
• Start from scratch, entering budget numbers manually

Like Xero, Zoho Books lets you enter budget numbers for a single period, then specify a percentage increase or decrease in budgeted numbers.

For instance, if your short-term plan for this year is to increase your revenue by 5% each quarter, you can enter that information in Zoho Books, and it will automatically calculate the 5% increase and auto-fill the rest of the budget. You can also apply a fixed amount for each period.

Zoho Books offers a comprehensive budget management feature with multiple entry options. Image source: Author

At the end of the specified budget period, you can compare actuals against your budgeted amounts to view business performance and make any adjustments going forward.

Get started on your budget today

Now that you know how easy it is to prepare a budget for your small business, what are you waiting for?

Completing a budget for your business will provide you with the information you need to grow your business, plan for the unexpected, and stay on track for the future.

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Free Small-Business Budget Templates

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A business budget template is one of the most important tools you can use to run your small business. However, many small-business owners skip this vital business management step.

The misconceptions surrounding budgeting are plenty. It seems complicated and time-consuming. But with a good business budget template, the process can be much less daunting.

An effective small-business budget template is a living document. Creating a budget and then forgetting about it is wasted effort. You must compare your actual numbers against your budgeted numbers regularly.

Therefore, your budget should be easy to access and adjust on an ongoing basis. But you don’t have to spend a lot of money on business budgeting software , if you don't want to. There are several free small-business budget templates available online.

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Additional pricing tiers (per month): $65, $99, $235.  

Why you need a business budget template

A business budget template is an essential tool for business owners who want to take care of their bottom line. Why should you invest in a smart template from the start?

Here's how a business budget template can set you up for success:

Track cash flow, expenses and revenue.

Prepare for regular business slowdowns.

Allocate your budget to the portions of your business that need capital most.

Plan for business investments and purchases.

Project all costs to starting and running your business.

Generally speaking, your business budget template can act as a business health scorecard if you invest in setting one up properly. Here's our list of the best budget templates available so you can do just that.

Capterra’s Free Small-Business Budget Template

The Capterra small-business budget template has been a fan favorite since it was published in 2015. In this one simple Excel workbook, you can create your monthly budget, your annual budget and then compare your actual numbers to your budgeted numbers. It also has a convenient overview sheet, which gives users access to their performance at a glance.

To help you through the process, Capterra has included a detailed Instructions tab, which walks you through how to use the template step by step. Start here to save yourself hours of time and frustration. As a bonus, there are several resources linked on the Instructions tab to help you create the perfect budget for your small business.

PDFConverter.com 15 Best Budgets

Rather than one bloated Excel workbook that tries to do everything, PDFConverter.com has compiled a library of 15 small-business budget templates.

These templates cover a wide range of budgeting needs, from a basic overview of your business income and expenses to marketing budget templates. The startup budget template is ideal for newbie entrepreneurs still in the planning stage of their businesses. And the cash flow template is perfect for identifying and plugging cash flow leaks.

» MORE: The best accounting software for startups

Annual Business Budget in Google Sheets

Do you love all things Google? You can create a comprehensive budget for your small business right from Google Sheets. Simply navigate to your Sheets and then click on Template Gallery . Our friends at Intuit QuickBooks have created an annual business budget you can use for free.

To fully appreciate the power of the template, review the Summary tab after you have entered your budget figures. The tables and graphs on this tab offer a visual representation of your income and expenses, making it easy to see where you stand at a glance.

Microsoft Office Template

This beautiful template from Microsoft Office focuses exclusively on expenses, but it does that job exceptionally well. There are tabs for planned and actual expenses, a tab for automatically calculated variances between the two and an expense analysis tab complete with pie charts.

Your accounting software

While not a free template per se, you likely have a powerful budgeting tool available right inside your business accounting software . Though not as flexible as a separate template, there are many advantages to using the budgeting feature of your accounting software.

The budgeting feature in your accounting software will coincide with your chart of accounts. Depending on the software you use, you can create a budget to actual comparison reports with the click of a button, making analysis a cinch.

Some software programs even let you set multiple budget scenarios and have “cloning” features, which simplify the budgeting process after the first year.

Designing your budget

Now that you’ve chosen your business budget template, it’s time to start designing your budget. This is where many small-business owners procrastinate because people typically see budgeting as restrictive or punishing.

It's time to shift your perspective on budgeting. Most people start with income and tinker with their expense amounts until they arrive at a balanced or surplus budget. This method usually leads to unrealistic projections and ends in frustration.

Instead of a top-down approach, consider “reverse engineering” your budget by following these four simple steps:

Form your income projections and write those down outside of your budget template. Put this paper or spreadsheet away until after you have completed the next step.

Enter your expenses into your budget template. Be very honest in your entries and include everything. Going through several months’ or even a year’s worth of accounting data or bank and credit card statements will ensure you capture all your spending. This is not the step where you want to try to eliminate expenses. Record everything, only excluding expenses you have already eliminated from your monthly or annual spending.

Enter your income from the projections you formed in step 1.

Review your budget. If your budget shows a projected loss, analyze your expenses and identify areas where you can reduce spending.

This approach makes sure you avoid the temptation of forcing your budget to balance. While you do want your budget to balance — or better, to show a cash surplus — having unrealistic income or expense numbers will lead to frustration and resistance during the budgeting process.

Monthly or quarterly, compare your actual income and expense numbers to your budgeted numbers. Regular tracking helps identify financial pitfalls before they become unmanageable.

Frequently asked questions

How do i make a budget template.

You can create a small-business budget template from scratch by using free software like Microsoft Excel or Google Sheets. However, it’s often more efficient to download a template (see our list above). A template with built-in tables and formulas makes plugging in your revenue and expenses and calculating your profit or loss quick and straightforward.

What is included in a small-business budget?

Your small-business budget will include your revenue, expenses and your profit or loss. Each section will be broken into subcategories. For example, under revenue, you might have sales and income from sponsorships. Expenses might be broken down into rent, employee salaries and marketing. After you tally your revenue and expenses, you can then calculate your profit and loss statement.

How much should a small-business budget be?

A budget will vary by your business and industry. For example, you can potentially start a social media consulting business for less than $5,000. But a food truck business may necessitate a budget of at least $50,000. You must tailor your small-business budget to your unique needs.

On a similar note...

How to Create a Small Business Budget in 5 Simple Steps

Want to protect the financial health of your small business? You need a business budget. Here's how to create one.

When you build a business, there are a lot of things to stay on top of, from marketing and finding new  clients  to building a website and establishing your digital presence. But there’s one element that you want to stay on top of from the very beginning—and that’s your business budget.

Having a detailed and accurate budget is a must if you want to build a thriving, sustainable business. But how, exactly, do you create one? What are the steps for business budget planning?

As a small business owner, let’s take a look at how to create a business budget in five simple, straightforward steps.

What’s a Business Budget—and Why Is It Important?

Before we jump into creating a business budget, let’s quickly cover what a business budget is—and why it’s so important for small businesses.

A business budget is an overview of your business funds. It outlines key information on both the current state of your finances (including income and expenses) and your long-term financial goals. Because your budget will play a key role in making sound financial decisions for your business, it should be one of the first tasks you tackle to improve business success.

And, as a  financially savvy owners, you’ll also want to have a budget in place to help you:

• Make sound financial decisions.  In many ways, your business budgets are like a financial road map. It helps you evaluate where your  business finances  currently stand—and what you need to do to hit your financial goals in the future for business growth.
• Identify where to cut spending or grow revenue.  Your business budgets can help you identify areas to decrease your spending or increase your revenue, which will increase your  profitability  in the process, outline unexpected costs, and help your sustain your business goals.
• Land funding to grow your business.  If you’re planning to apply for a business loan or raise funding from investors, you’ll need to provide a detailed budget that outlines your income and expenses.

Now that you understand why budget creation is so important to your business decisions, let’s jump into how to do it.

Business Budget Step 1: Tally Your Income Sources

First things first. When building a small business budget, you need to figure out how much money your business is bringing in each month and where that money is coming from – this will hep create an operating budget based on your business income.

Your sales figures (which you can access using the Profit & Loss report function in FreshBooks) are a great place to start. From there, you can add any other sources of income for your business throughout the month.

Your total number of income sources will depend on your business model.

For example, if you run a  freelance  writing business, you might have multiple sources of income from:

• Freelance writing projects
• A writing course you sell on your website
• Consulting with other writers who are starting small businesses

Or, if you run a brick-and-mortar retail business, you may only have one source of income from your store sales.

However many income sources you have, make sure to account for any and all income that’s flowing into your business—then tally all those sources to get a clear picture of your total monthly income to build your master business budget template.

Business Budget Step 2: Determine Fixed Costs

Once you’ve got a handle on your income, it’s time to get a handle of your costs—starting with fixed costs.

Your fixed costs are any expenses that stay the same from month to month. This can include expenses like rent, certain utilities (like internet or phone plans), website hosting, and payroll costs.

Review your expenses (either via your bank statements or through your FreshBooks reports) and see which costs have stayed the same from month to month. These are the expenses you’re going to categorize as fixed costs.

Once these costs are determined, add them together to get your total fixed and variable costs expense for the month.

TIP:   If you’re just starting your business and don’t have financial data to review, make sure to use projected costs. For example, if you’ve signed a lease for office space, use the monthly rent you will pay moving forward.

Business Budget Step 3: Include Variable Expenses

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Variable costs don’t come with a fixed price tag—and will vary each month based on your business performance and activity. These can include things like usage-based utilities (like electricity or gas), shipping costs, sales commissions, or travel costs.

Variable expenses will, by definition, change from month to month. When your profits are higher than expected, you can spend more on the variables that will help your business scale faster. But when your profits are lower than expected, consider cutting these variable costs until you can get your profits up.

At the end of each month, tally these expenses. Over time, you’ll get a sense of how these expenses fluctuate with your business performance or during certain months, which can help you make more accurate financial projections and budget accordingly.

Business Budget Step 4: Predict One-Time Spends

Many of your business expenses will be regular expenses that you pay for each month, whether they’re fixed or variable costs. But there are also costs that will happen far less frequently. Just don’t forget to factor those expenses when you create a budget as well.

If you know you have one-time spends on the horizon (for example, an upcoming business course or a new laptop), adding them to your budget can help you set aside the financial resources necessary to cover those expenses—and protect your business from unexpected costs in the form of a sudden or large financial burden.

On top of adding planned one-time spends to your budget, you should also add a buffer to cover any unplanned purchases or expenses, like fixing a damaged cell phone or hiring an IT consultant to deal with a security breach. That way, when an unexpected expense pops up (and they always do), you’re prepared!

Business Budget Step 5: Pull It All Together

You’ve gathered all of your income sources and all of your revenue and expenses. What’s next? Pulling it all together to get a comprehensive view of your financial standing for the month.

On your businesses master budget, you’ll want to tally your total income and your total expenses (i.e., adding your total fixed costs, variable expenses, cost of goods, and one-time spends)—then compare cash flow in (income) to cash flow out (expenses) to determine your overall profitability.

Having a hard time visualizing what a business budget looks like in action? Here’s an operating budget example to give you an idea of what your new business budget might look like each month:

A Client Hourly Earnings: $5,000 B Client Hourly Earnings: $4,500 C Client Hourly Earnings: $6,000 Product Sales: $1,500 Loans: $1,000 Savings: $1,000 Investment Income: $500

Total Income: $19,500

Fixed Costs

Rent: $1,000 Internet: $50 Payroll costs: $5,000 Website hosting: $50 Insurance: $50 Government and bank fees: $25 Cell phone: $50 Accounting services : $100 Legal services: $100

Total Fixed Costs: $6,425

Variable Expenses

Sales commissions: $2,000 Contractor wages: $500 Electricity bill: $125 Gas bill: $75 Water bill: $125 Printing services: $300 Raw materials: $200 Digital advertising costs: $750 Travel and events: $0 Transportation: $50

Total Variable Expenses: $4,125

One-Time Spends

Office furniture: $450 Office supplies for new location: $300 December business retreat: $1,000 New time tracking software: $500 Client gifts : $100

One-Time Spends: $2,350

Expenses: $12,900

Total Income ($19,500) – Total Expenses ($12,900) = Total Net Income ($6,600)

Above all, once you have a clear sense of your profitability for the month, you can use it to make the right financial decisions for your small business moving forward.

For example, if you realize you’re in the red and spending more than you earn, you might cut your spending and focus on  finding new clients . Alternatively, if your income is significantly higher than your expenses, you might consider investing your profits back into your business (like investing in new software or equipment).

Use Your Business Budget to Stay on Track

Putting in the work to create a budget for your small business may seem like a hassle. But while it takes a bit of time and energy, it’s worth the extra effort. Thorough business budgeting gives you the financial insights you need to make the right decisions for your business to grow, scale, and prosper in the future.

This post was updated in October 2023

Written by Deanna deBara , Freelance Contributor

Posted on June 20, 2017

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Step-by-Step Guide to Creating a Business Budget Plan

A well-structured business budget plan is crucial for success. It serves as a financial stability and growth roadmap, allowing companies to allocate resources wisely and make informed decisions. Understanding the basics of business budgeting is essential for any entrepreneur or business owner looking to create a solid financial plan to help them achieve their goals.

The Importance of Business Budget Planning

Business budget planning is not just about crunching numbers; it's about setting clear financial goals and outlining strategies to achieve them. It provides a framework for managing expenses, maximizing revenue , and ensuring the long-term sustainability of a company. Without a well-thought-out budget plan, businesses may struggle to stay afloat in today's competitive market.

Understanding the Basics of Business Budget

At its core, a business budget is an estimate of future income and expenses based on historical data and current trends. It involves identifying all sources of revenue and categorizing various types of expenses, including fixed costs (rent, salaries) and variable costs (utilities, marketing). Understanding these fundamental concepts is essential for creating an effective budget plan.

Benefits of Creating a Business Budget Plan

The benefits of creating a business budget plan are manifold. It clarifies where money is being spent and helps identify areas where costs can be reduced or investments can be made to drive growth. Additionally, having a well-structured budget plan can instill confidence in stakeholders, such as investors or lenders who want to see evidence of sound financial management .

Now that we've laid the groundwork for understanding the importance of business budget planning and its basics, let's delve deeper into the process by assessing your financial situation and setting achievable goals.

Assessing Your Financial Situation

Sarah Horsman Template from Strikingly

Now that you understand the importance of business budget planning, it's time to assess your financial situation. This involves analyzing your current revenue and expenses, identifying fixed and variable costs, and projecting future income and expenses.

Analyzing Current Revenue and Expenses

You must clearly understand your current revenue and expenses to create a business budget plan that works for your company . This involves looking at your sales figures, incoming cash flow, and all the money going out of your business. By analyzing these numbers, you can gain valuable insights into where your money is coming from and where it's going.

Identifying Fixed and Variable Costs

When creating a business budget plan, it's crucial to distinguish between fixed and variable costs. Fixed costs, such as rent or salaries, remain constant regardless of your level of production or sales. Variable costs, like raw materials or shipping expenses, fluctuate with production levels or sales volume. Identifying these costs will help you make more accurate financial projections.

Projecting Future Income and Expenses

Looking ahead is an essential part of business budget planning. You can anticipate potential financial challenges or opportunities by projecting future income and expenses based on historical data and market trends. This will enable you to make informed decisions about resource allocation and strategic investments.

Remember that creating a business budget plan is not just about crunching numbers; it's about setting the stage for sustainable growth and success in the long run.

Setting Financial Goals

Now that you understand the basics of business budget planning, it's time to set your financial goals . Establishing short-term and long-term objectives can create a roadmap for your business's financial success. Whether increasing revenue or reducing expenses, having clear goals will guide your budgeting decisions.

Establishing Short-term and Long-term Objectives

To effectively create a business budget plan, it's crucial to establish both short-term and long-term financial objectives. Short-term goals could include reducing overhead costs by a certain percentage within six months, while long-term goals might involve doubling your annual revenue within three years. These objectives provide direction for allocating funds and making strategic financial decisions.

Allocating Funds for Growth and Expansion

One of the key benefits of creating a business budget plan is the ability to allocate funds for growth and expansion. Whether you're looking to invest in new equipment, expand your product line, or open additional locations, setting aside funds in your budget allows you to pursue these opportunities without compromising your financial stability .

Planning for Contingencies and Emergencies

In business, unexpected events can have a significant impact on your finances. Planning for contingencies and emergencies is essential when creating a business budget plan. You can protect your business from potential financial hardships by setting aside a portion of your budget for unforeseen circumstances, such as economic downturns or equipment breakdowns.

Creating the Budget Plan

Now that you understand the importance of business budget planning, it's time to create a solid business budget plan. When choosing the right budgeting method, consider your company's size, industry, and financial goals. Whether it's zero- or activity-based budgeting, select a method that aligns with your business objectives and ensures accurate financial management .

Choosing the Right Budgeting Method

Selecting the right budgeting method is crucial for effective business budget planning. Zero-based budgeting involves justifying every expense from scratch, while activity-based budgeting focuses on cost allocation based on activities. Whichever method you choose, ensure it aligns with your company's financial objectives and provides a clear resource allocation roadmap.

Allocating Funds to Different Departments

When creating a business budget plan, allocating funds to different departments is essential based on their specific needs and priorities. Consider departmental goals, operational requirements, and revenue generation potential when distributing financial resources. This approach ensures each department has the necessary funds to function effectively within the business framework.

Monitoring and Adjusting the Budget as Needed

Once you've allocated funds to different departments in your business budget plan, monitoring and adjusting the budget as needed is essential. Regularly review your financial performance against the set targets and adjust based on changing market conditions or internal dynamics. Flexibility ensures that your business remains agile and responsive to evolving economic landscapes.

By carefully choosing the right budgeting method, allocating funds to different departments thoughtfully, and monitoring and adjusting the budget as needed, you can create a robust business budget plan that sets your company up for long-term success in managing its finances effectively.

Implementing the Budget Plan

Quantum Template from Strikingly

Now that you have created a solid business budget plan, it's time to implement it. This step involves communicating the budget to key stakeholders, training employees on budgetary guidelines, and integrating the budget into daily operations.

Communicating the Budget to Key Stakeholders

It is crucial to inform all relevant stakeholders about the business budget plan. This includes shareholders, managers, and other decision-makers who must know the financial goals and constraints. Clear communication will ensure everyone is on the same page and can work towards common objectives.

Training Employees on Budgetary Guidelines

Employees play a vital role in adhering to the budget plan. Providing them with comprehensive training on budgetary guidelines will help them understand their responsibilities in managing costs and staying within allocated funds. This will empower them to make informed decisions that align with the company's financial objectives.

Integrating the Budget into Daily Operations

Incorporating the business budget plan into daily operations requires a strategic approach. It involves aligning all activities with the financial goals outlined in the budget, ensuring that resources are utilized efficiently, and making adjustments as needed to stay within budgetary limits. This integration fosters a culture of financial responsibility throughout the organization.

By effectively implementing your business budget plan through clear communication, employee training, and seamless integration into daily operations, you can set your company up for financial success while achieving your long-term objectives.

Tracking and Evaluating Performance

Monitoring Budget Variance and Deviations

Once you have implemented your business budget plan, it's crucial to regularly monitor the budget variance and identify any deviations from the projected expenses and revenue. This will help you understand where adjustments need to be made and where you may exceed or fall short of your financial goals.

Conducting Regular Financial Reviews

Regular financial reviews are essential for evaluating the performance of your business budget plan. By conducting these reviews, you can assess whether your actual income and expenses align with what was projected in the budget. This will allow you to make informed decisions on where to allocate funds or where to cut back to stay on track with your financial objectives.

Making Informed Decisions Based on Budget Analysis

Analyzing the data from your business budget plan is key to making informed decisions for your company's future. By understanding how well your budget is performing, you can strategically plan for growth, expansion, and any potential contingencies or emergencies that may arise.

Continuously tracking and evaluating the performance of your business budget plan is vital for maintaining financial stability and achieving long-term success. By closely monitoring variance, conducting regular reviews, and making informed decisions based on budget analysis, you can ensure that your business stays on track toward its financial goals.

Tips for Successfully Implementing Your Business Budget Plan: Striking a Balance Between Dreams and Dollars

Every business owner knows the importance of a budget—it's the roadmap to financial stability and growth. But crafting a brilliant budget is only half the battle. The real test lies in implementation. How do you translate those meticulously planned numbers into tangible results? Here are some key tips to ensure your business budget plan becomes a reality, not just a document gathering dust on a shelf:

1. Set SMART Goals

Your budget shouldn't exist in a vacuum. It should be tightly woven into your business goals. But instead of vague aspirations, set SMART goals: Specific, Measurable, Achievable, Relevant, and Time-bound . This clarity provides a clear direction for allocating resources and tracking progress.

2. Foster Collaboration

Budgeting isn't a solo act. Involve key stakeholders in the process, from department heads to team members. This collaborative approach fosters buy-in, ensures everyone understands their role in achieving financial goals, and harnesses diverse perspectives for smarter decision-making.

3. Embrace Transparency

Open communication is crucial. Share the budget with relevant team members, not just financial experts. This transparency builds trust, empowers employees to make informed decisions, and encourages a culture of financial responsibility.

4. Track and Monitor

Don't let your budget become a static document. Regularly track actual spending against the planned figures. Identify any discrepancies, analyze the causes, and make adjustments as needed. This active monitoring allows you to course-correct before small deviations snowball into major issues.

5. Leverage Technology

Strikingly Landing Page

• Easy to use. Strikingly is a user-friendly platform that is easy to use, even for those without experience in website design .
• Affordable. Strikingly offers a variety of affordable plans to fit any budget.
• Mobile-friendly. Strikingly's websites are mobile-friendly, so you can reach your customers wherever they are.

Strikingly Website on a Mobile Device

• SEO-friendly. Strikingly's websites are SEO-friendly so that you can improve your website's ranking in search results.

Strikingly is a valuable tool to help businesses create and manage their online presence . Strikingly's features can also be helpful for businesses when creating a business budget plan.

6. Review and Adapt

The business landscape is dynamic. Be prepared to adapt your budget as circumstances change. Regularly review your plan, considering market shifts, new opportunities, and unforeseen challenges. A flexible approach ensures your budget remains relevant and responsive to the ever-evolving environment.

7. Celebrate Successes

Don't forget to celebrate your wins! Recognizing positive financial milestones and acknowledging the collective effort motivates everyone and reinforces the importance of adhering to the budget plan.

8. Build a Culture of Accountability

Create a culture where all share financial responsibility. Hold yourself and your team accountable for staying within budget limits. This fosters a sense of ownership and promotes responsible financial behavior across the organization.

9. Communicate Effectively

Regularly communicate budget updates, performance metrics, and any necessary adjustments to the team. This transparency keeps everyone informed, engaged, and empowered to contribute to the business's financial success.

10. Continuously Improve

Never stop learning and evolving. Regularly evaluate your budgeting process, identify areas for improvement, and implement new strategies to optimize your financial management. Remember, a successful budget is a living document, constantly adapting and growing alongside your business.

By following these tips and embracing tools like Strikingly , you can transform your business budget plan from a theoretical framework into a powerful tool for driving growth and achieving your financial aspirations. Remember, successful budgeting is a journey, not a destination. It requires ongoing commitment, collaboration, and a continuous focus on improvement. So, embark on your financial journey confidently and watch your business reach new heights of success.

A well-structured business budget plan can lead to long-term financial stability and growth. It helps identify areas for cost savings, allocate funds for expansion, and plan for contingencies, ultimately leading to improved profitability and sustainability for your business.

Remember that creating a well-structured business budget plan is crucial for the success and sustainability of your business. By following these steps and incorporating these tips into your planning process, you can ensure that your business is on the path to financial success and growth.

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How to Create a Basic Business Budget

8 Min Read | May 16, 2024

You’d never intentionally set your business up to fail, right? But if you don’t know your numbers and how to make a business budget, that’s exactly what you’re doing. Money problems and bad accounting are two reasons why many small businesses don’t make it past their first five years. 1

Talking about budgets can feel overwhelming. We get it. For a lot of business leaders, it’s a lot more comfortable dreaming up big ideas and getting stuff done than digging into numbers. But you can’t set yourself up for steady growth until you have a handle on the money flowing in and out of your company. You also can’t enjoy financial peace in your business.

Not a numbers person? That’s okay. Follow the simple steps below to learn how to create a budget for a business and manage your finances with confidence. We’ll even give you a link to an easy-to-use small-business budget template in the EntreLeader’s Guide to Business Finances .

But before we get to that, let’s unpack what a budget is and why you need one.

Don't Let Your Numbers Intimidate You

With the EntreLeader’s Guide to Business Finances, you can grow your profits without debt—even if numbers aren’t your thing. Plus, get a free business budget template as part of the guide!

What Is a Business Budget?

A business budget is a plan for how you’ll use the money your business generates every month, quarter and year. It’s like looking through a windshield to see the expenses, revenue and profit coming down the road. Your business budget helps you decide what to do with business profit, when and where to cut spending and grow revenue, and how to invest for growth when the time comes. Leadership expert John Maxwell sums it up: “A budget is telling your money where to go instead of wondering where it went.”

But here’s what a business budget is not: a profit and loss (P&L) report you read at the end of the month. Your P&L is like a rearview mirror—it lets you look backward at what’s already happened. Your P&L statement and budget are meant to work together so you can see your financial problems and opportunities and use those findings to forecast your future, set educated goals, and stay on track.

Why Do I Need to Budget for My Business?

Creating a budget should be your very first accounting task because your business won’t survive without it. Sound dramatic? Check this out: There are 33.2 million small businesses in the United States. Out of the small businesses that opened from 1994 to 2020, 67.7% survived at least two years. But less than half survived past five years. 2    The top reasons these businesses went under? They hit a wall with cash-flow problems, faced pricing and cost issues, and failed to plan strategically . 3

As a business owner, one of the worst feelings in the world is wondering whether you’ll be able to make payroll and keep your doors open. That’s why we can’t say it enough: Make a business budget to stay more in control and have more financial peace in running your business.

A budget won’t help you earn more money, but it will help you:

• Maximize the money you’ve got
• Manage your cash flow
• Spend less than your business earns
• Stay on top of tax payments and other bills
• Know if you’re hitting your numbers so you can move at the true speed of cash

How to Create a Budget for a Business

Your ultimate goal is to create a 12–18-month business budget—and you will get there! But start by building out your first month. Don’t even worry about using a fancy accounting program yet. Good ol’ pen and paper or a simple computer document is fine. Just start! Plus, setting up a monthly budget could become a  keystone habit  that helps kick-start other smart business habits.

Here’s how to create your first budget for business:

1. Write down your revenue streams.

Your revenue is the money you earn in exchange for your products or services. You’ll start your small- business budget by listing all the ways you make money. Look at last month’s P&L—or even just your checking account statement—to help you account for all your revenue streams. You’re not filling in numbers yet. Just list what brings in revenue.

For example, if you run an HVAC business, your revenue streams could be:

• Maintenance service calls
• Repair services and sales
• New unit installation
• Insulation installation
• Air duct cleaning

2. Write down the cost of goods sold (if you have them).

Cost of goods is also called inventory. These expenses are directly related to producing your product or service. In the HVAC example, your cost of goods would be the price you pay for each furnace and air conditioning unit you sell and install. It could also include the cost of thermostats, insulation and new ductwork.

3. List your expense categories.

It’s crazy how much money can slip through the cracks when we’re not careful about putting it in the budget. Think through  all  your business expenses—down to the last shoe cover your technicians wear to protect your customers’ flooring during house calls. Here’s a list of common business budget categories for expenses to get you started:

• Office supplies and equipment
• Technology services
• Training and education

Related articles : Product Launch: 10 Questions to Ask Before You Launch a New Product New Product Launch: Your 10-Step Checklist

4. Fill in your own numbers.

Now that you have a solid list of revenue and expense categories, plug in your real (or projected) numbers associated with them. It’s okay if you’re not sure how much you’ll sell just yet or exactly how much you’ll spend. Make an educated guess if you’re just starting out. If your business has been earning money for a while, use past P&L statements to guide what you expect to bring in. Your first budget is about combining thoughtful guesswork with history and then getting a more realistic picture month over month.

5. Calculate your expected profit (or loss). 

Now, number nerds and number haters alike—buckle in. We’re about to do some basic accounting so you know whether you have a profit or loss. This is your chance to figure out exactly how much you’re spending and making in your business.

Take your  gross revenue (the total amount of money you expect to make this month) and subtract your expenses and  cost of goods sold  to find your profit or loss. Here’s what that calculation looks like:

Revenue - Expenses - Cost of Goods Sold = Profit or Loss

Don’t freak out if your first budget shows a loss. That actually happens a lot with your first few monthly budgets. You’re learning and getting context on what’s coming in and going out so you can make adjustments. Keep doing your budget, and before you know it, you’ll be a rock star at telling your money where to go, planning for emergencies ,  investments and opportunities , and building momentum.  

6. Review your budget often. 

Whew! Once you get that first business budget under your belt, take a deep breath and celebrate. You’ve just done something huge for your business! (You’ll also be happy to know, budgeting gets easier from here since you can copy and paste your first one and tweak your income and expenses each month.)

But here’s the thing: Your budget can’t just sit in a drawer or on your computer. You’ve got to look at it consistently to make sure you’re actually following it.

Weekly Review

At least once a week, someone in your business (whether it’s you, a qualified team member or a bookkeeper) needs to track your transactions so you know what’s happening with your money all month. Then you can make adjustments before you have more month than money.

Every time you review your budget, ask yourself these three questions:

• Are we on target to hit our revenue goal this month?
• If not, what we can change to get there?
• Are there any expenses we can cut or minimize?

Monthly Review

You also need to review your business budget when you close your books every month to compare it to your actuals—your P&L. Otherwise, how can you know how you’re doing?

7. Work toward a 12–18-month budget.

Now that you’ve created your first month’s budget, move on to the next one. You’ve got this! The more budget-building reps you get in, the better you’ll be at looking forward and planning for growth. In no time, you’ll reach that ultimate goal of a 12–18-month budget. Just keep adjusting as you go based on all you’re learning about getting an accurate road map for your finances.

As you start owning your numbers, remember: It’s okay if you’re a little intimidated by the process of accounting and making a budget for business. But it’s not okay to avoid the financial details that will make or break you. So just keep applying the basics we covered and keep moving forward.

Follow the steps above to create your budget, and review it often to stay on track.

Want a tool to make budget building simpler? Check out the EntreLeader’s Guide to Business Finances. It includes an easy-to-use small-business budget template in the extra resources section.

What are the benefits of budgeting?

A business budget will help you:

• Make informed, strategic decisions
• Invest in under-resourced areas
• Trim over-resourced areas
• Plan for the future
• Set goals and track your progress

Does using a small-business budget template save time?

Yes! Using a small-business budget template helps you plug in the numbers you need to operate with more confidence and fewer wrong turns. Check out the small-business-budget template inside our EntreLeader’s Guide to Business Finances .

How do I budget if I own a seasonal business?

Just like farmers put extra hay in the barn to cover leaner months, if you’re a seasonal business owner, you need to set aside resources in times of plenty to cover months your business turns down. Use your P&L statements to go back in time and look at financial performance year over year. Then, create your business budget based on what you learn and on any changes you see coming. You can also go to trade conferences to get an idea of your industry’s seasonal benchmarks.

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About the author

EntreLeadership

EntreLeadership is the part of Ramsey Solutions that exists to help small-business owners thrive by mastering themselves, rallying their teams, and imposing their will on the marketplace. Thousands of leaders use our proven EntreLeadership System and resources to develop as leaders and grow their businesses. These resources include The EntreLeadership Podcast , EntreLeadership Elite digital membership , books, live events, coaching sessions and business workshops. Learn More.

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How to Make an Ecommerce Business Plan for Your Startup

Darren DeMatas

August 21, 2024

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In addition to receiving commissions generated through affiliate marketing, we are able to fund our independent research and reviews at no extra cost to our readers. Learn more.

So you’ve decided that you want to quit your day job and start your very own ecommerce empire. That’s great!

But before you become the next Jeff Bezos  (and definitely before you quit your job!), it’s worth spending some time thinking about a business plan. In this article, we’ll dive into the key elements of an ecommerce business plan, which is very different than writing traditional business plans.

Why You Should Create a Business Plan

We know that starting an ecommerce business is exciting, and it can be tempting to jump right in without constructing a business plan. READ: PLEASE DON’T DO THIS.

If you haven’t put your ideas, questions and concerns on paper, then you haven’t given your business model enough thought .

Taking the time to write a business plan might seem like a lot of work, but it can save you a lot of time and money in the long run by better preparing you for potential challenges and opportunities that you’ll face as a first-time entrepreneur. Think of it as a roadmap for your new business venture.

It’s exciting to start your own ecommerce business. However, you want to be well prepared and not jump into anything without having a solid, foolproof ecommerce business plan in place.

After all, you wouldn’t jump out of a plane without a parachute, so why start a business without a safety device in place? That safety device is your business plan.

The business plan is the brainstorming process that ensures your concept and goals are realistic.

This is more than just mental notes. True business plans take your ideas , questions, and concerns and put those in writing.

As you start creating your business plan, you’ll soon understand that it’s more than a single piece of paper with handwritten details on it. It’s a clearly constructed format of how your business will be created, how it will operate, and what you hope the future holds in terms of a successful ecommerce business.

When you write your business plan, be sure to have a target audience in mind. Are you going to look for investors or put a Kickstarter campaign into motion and use this as your descriptive platform? If so, make sure that your business plan contains everything the audience would want to know about your business (and more!). Many traditional funding solutions require a business plan in order to give you capital. However, there are alternative solutions, such as  Payability  that specialize in ecommerce and don’t require credit checks, a business plan, or any complicated paperwork. They can also get you approved in as little as 24 hours.

When your business plan is completed, you should have achieved the following goals:

• Knowledge:  A greater sense of knowledge of the business aspects.
• Resources:  The resources you’re going to need to make your business successful, such as partners, money, employees, etc.
• Road Map: Have clear set goals to take you from the very beginning of your business and onward.
• Viability: In other words, is your business possible? Will you have enough profit margins to keep the doors open long-term?

Now that you know why you should create a business plan, it’s time to move on to how you can create your business plan and get started putting your ecommerce business into motion.

How to Start an Ecommerce Business Plan

At the very beginning of the planning stages, it’s a good idea to develop a framework for your business model. This business model will continue to evolve as you create each section of your ecommerce business plan, so don’t strive for a perfect completed plan on the first try. You will be making tweaks to the plan of certain steps along the way.

There are many ways to sell products online and different business models  to pursue. Research and learn from successful ecommerce business examples in the market. The exact business model you follow will be one that makes the most sense with your resources, skills, and interests.

In order to create the best online business plan with your product in mind, you need to figure out the following things:

What are you selling?

The first step to creating an online business is to learn the absolute basics of what you can sell.

• Physical products: Clothing , shoes, home goods
• Digital products: Software as a Service products, ecourses, ebooks
• Services: Consulting services, home cleaning

Who are you selling to?

• Business-to-Business (B2B): You are selling to organizations, corporations, and non-profits rather than individual customers
• Business to Consumer (B2C): This means you are selling to individual consumers rather than businesses
• Marketplace: You are acting as a middleman by bringing businesses and (B2B or B2C) customers to one website.

How are you sourcing your product?

• Manufacture in-house: You make your product or service in-house
• Third-party manufacturer: You outsource the manufacturing of your product or service to a third-party manufacturer
• Dropship: You partner with a dropship manufacturer. Basically, this means that they make your product, package it and ship it directly to your customer while your company handles the entire customer relationship.
• Wholesale : You buy goods or services from other companies in bulk and re-sell those products on your online store

Additional References

• Entrepreneurship: Business & Marketing Plans
• Small Business and Entrepreneurship
• Entrepreneurship Resources
• Business Plan Resources

Executive Summary

The executive summary will be written according to your goals, and it’s recommended that this is done at the very end of your business plan completion. This will ensure that you include all of the important factors about your business and present your ideas in a concise and complete way.

Some of the features you’ll include in the executive summary include information showing that you’ve done your research, you have concrete sales forecasts, and the main details about your brand.

Business Model

When you’re figuring out your business model, you have to consider four different areas:

• Monetization strategy
• Product/industry
• Target market
• Sales channel

Monetization Strategy

The monetization strategy delves into the methods you are going to use to sell your products.

This strategy will look at different product monetization methods, including white label, private label , affiliate marketing, wholesale, dropshipping, and even selling ads.

Product/Industry

The product industry section is where you summarize your main niche.

For example, “Vegan Skincare Products.”

Target Market

In the target market section, you will write a sentence or so on who your target market, or ideal customer, is in the community.

If you’re selling vegan skincare products, your target customers might be women who embrace the vegan lifestyle and use natural skincare products in their daily beauty regimen.

Sales Channel

The sales channel refers to where you’re going to sell your products.

For example, you might be selling your products on your own website, and this should be entered in this section.

Business Overview

This next section covers your company overview.

This section of your business plan will cover various features of your company, including the following:

• Company type
• Domain name
• Value proposition
• Brand traits

The brand name section lists your business name or brand name.

This is an extremely important aspect of your business plan as it’s what will set the tone for everything that follows.

Pick a brand name that’s simple yet unique and is something that can be used in a wordplay manner, if desired, but not pun-worthy.

Company Type

The company is how your business operates. For example, you might label your business as an LLC , S-corporation, sole proprietor, or some other type of business organization.

The best way to determine how you should categorize your company is to speak to your accountant. There are various tax and legal aspects to forming your business in a certain way.

Speak with the professionals in the company and corporation formation field to determine how to label your company and which company type best benefits your business in a variety of ways.

Domain Name

This section is where you list your domain name.

Choose a domain name that is memorable and embraces the overall traits and features of your business.

And, when choosing a domain name, be sure to think of SEO aspects when doing so. You’ll find out just how much all of these things tie together and ensure a frequently-visited website is the end result.

Keep in mind that with ecommerce, the domain name is just as important as the brand name. Maybe even more so!

Value Proposition

A value proposition is a short, crisp statement that will gauge how clear your idea is. Write this section as if you had one minute to explain your business to a potential investor or customer and then practice it over and over again.

The value proposition can be used on your ecommerce store as your company description.

Here’s a good example: Say you’re looking to start a hiking company called Atlas Hiking Co. which sells premium performance hiking shirts. A possible company description could be the following:

Atlas Hiking Co. is a lifestyle hiking company that produces high-performance hiking shirts for outdoor lovers. Our proprietary SPF40 fabric is one of the lightest fabrics on the market, providing mountain lovers with maximum comfort, both from a breathability and sun-protection standpoint. Our product is made in the U.S.A. and a portion of our profits are donated to preserve national parks around the country.

Pay special attention to all the sensory words !

The mission statement in your business plan is the “why” of it all.

For example, why you started the business, why you are selling the products you are selling, etc., can all be added to this section of your business plan.

You can make this portion as simple or detailed as you like. Just make sure to properly and clearly explain your business mission.

The vision part of the business plan is your “how” in the grand scheme of things. It is the dream you have for your company and the path you’re going to take to realize that dream.

When you write the vision portion of the business plan, think long-term. What are you hoping to achieve, not just in the near future but for the long haul of the life of your business?

Look into the future and plan out where you see your business in 5, 10, even 20 years from now.

This will help you construct the rest of your business plan if you know where you want your business to head, now and in the future.

Brand Traits

The brand traits section is a short section in your company overview.

Basically, in the brand traits section you’re going to want to list three to five words that describe your brand.

Think of your brand personality and describe it using a few separate powerful words.

The personnel section lists all individuals, including yourself, who will be involved in the daily operations of your business. You can create a separate section for a full operations plan or add that later.

Some business owners choose to handle all duties on their own or with a partner, while others will hire individuals to fill the following roles:

• CEO (usually the business owner)
• Management team
• Customer service/logistics
• PR/Social media specialist
• SEO manager
• Advertising manager

Competitive Market Analysis

Here’s a fact you can bank on: there has never been a successful e-commerce entrepreneur that didn’t understand his/her target market cold.

That’s why this section is one of the most important in the entire business plan. It will force you to understand the industry in which you operate, the overall industry analysis and outlook, the existing competition, and your target customer demographic.

Market Segment

The market segment portion of the business plan will help you to put your ideas down on paper, make them more focused, and get your team together.

This area will include your niche selection, target market, and competitive analysis.

Niche Selection

The niche section  provides an overview of your niche, why you selected it, whether there’s a micro niche included, and the type of niche you’ve chosen.

The purpose of this section is to crystalize the ideas that you have and make sure they are understandable and viable.

The target market section covers an overview of your target market plus describes your market segments.

Ask yourself who your  target customer  is (population size, age, geography, education, ethnicity, income level) and consider whether consumers are comfortable with buying your product category online.

When listing the target market information, make sure to mention your target audience size as this is important for ensuring that your audience will be adequately covered.

Competitive Analysis

With the competitive analysis portion of your market analysis, you want to list your market leader and direct and indirect competitors.

After you mention who these entities are, you need to list the characteristics of each one, such as domain name, business model, monthly traffic, and pricing range.

However, before you even get started in writing this section, you need to spend several hours researching your target market.

Here are some of the most efficient ways to research a particular market:

Industry reports

Google is your best friend. Look for any recent industry reports on your market of choice. This will give you a good sense of how much growth the industry is experiencing, why this growth is happening, and what are the largest customer segments. In our example of Atlas Hiking Co., we should research the outdoor apparel market.

Let’s say that through our research of the outdoor apparel industry, we discovered that there was a huge boom in youth hiking apparel. Perhaps parents were increasingly concerned about their kids’ exposure to UV rays while hiking, so they began to spend more money on their kids. We could use this valuable information to guide our business strategy.

There’s only so much you can read online. Go to a nearby store that sells similar products to yours and interview the store representative. The store rep has interacted with hundreds of interested customers, which can lead to thousands of valuable insights! It’s amazing how these insights can translate into a meaningful business opportunity.

Here’s an example:

If I were going into Billy’s Outdoor Store to research the outdoor apparel market, I would probably ask Billy the following:

• What are your best-selling products?
• What are your worst-selling products?
• Find products similar to yours and ask the representative his/her favorite features on products similar to yours.
• How much are customers generally willing to spend on these types of products?
• Do customers make repeat orders of any of these products?
• Do you get a lot of customers that are looking to buy last-minute hiking gear before they go on a hike?

Competition

Create an Excel spreadsheet of all of your competitors. In your spreadsheet, you should have the following columns:

• Competitor Name
• Price point
• Product Description
• Key Features (e.g., fabric, waterproof, slim fit, etc.)

What is the competition missing? Is there a gap in the offering? Where you can add some additional value?

After conducting the competitor analysis, Atlas Hiking Co. might find that the competition’s hiking shirts offer very few features at a low price point, but no one offers a luxury hiking shirt with additional features at a higher price point.

This is just an example of the types of insights one can gain from market research which can drastically alter your business model.

Keyword Research

By using Google’s keyword planner  and trends pages, you can get a good sense of how in demand your product is and whether it’s trending upward or downward. Google is great for a general idea, just don’t bank on it.

Some other keyword tools you can use for keyword research include Ahrefs, JungleScout, and Viral Launch. Check out this list  for more ideas.

Trade shows

Are there nearby trade shows that you can go to? Again, creating connections with other people in your industry is a surefire shortcut to countless hours of reading on the internet. Trade shows are also a great opportunity to talk to competitors, meet manufacturers, and better understand where things are heading in your industry.

Once you finish researching the relevant industry, you should summarize your findings by answering the following questions:

General Industry

• How big is the overall industry?
• How big is the specific sub-industry in which you intend to operate?
• Where has most of the historic growth in the market come from?
• Why is this the right time to enter this market?
• What are the sub-segments that are poised for future growth (e.g., youth apparel)?
• How crowded is the product category with competition?
• How is your competition distributing its product (online, retail, wholesale, etc.)?
• What’s missing from the competition’s product offering?

Products and Offers

So we know we want to sell hiking shirts, but how do you research specific products?

But for some of us, we’re not quite sure what we should sell. To succeed in online retail, you need a product that is trending upwards in a growing niche.

Different types of products

Some of the different types of products include the following:

• Convenience products: Frequent purchase products, little effort on buying
• Shopping products: Less frequently purchased in between purchases, little more effort and planning, shop around
• Specialty products: Strong brand preference and loyalty, will buy no matter what the price

The various types of niches include the following:

• Hobby niches
• Lifestyle niches
• Problem niches
• Weird/embarrassing niches

Existing products

Come up with detailed specifications for each product or service you intend to sell. If it’s a hiking shirt we’re selling, we would want to have:

• Detailed sketches of the shirt
• Fabric weight, materials, type
• Key features (e.g., pre-shrunk, water-proof, SPF 40)

Future product pipeline

What are other products that you have in the pipeline? Perhaps once you’ve successfully sold hiking shirts, you’re able to leverage your manufacturing relationships to provide hiking socks and shorts. Include that information in this section.

The products and services section will cover the various selling categories of items.

These product offerings will include the following:

• Core product

Each product group will have its own purpose in your sales catalog. For example, tripwire is the product that brings customers to your ecommerce store or online marketplaces  while the core product is your main seller.

Knowing what products you’ll include within each section allows you to have a firm grasp on what your main product will be and how the other types of products will work alongside your main product.

This section will also cover the search volume and Amazon pricing range.

You’ll need to calculate your true costs. You have to make sure you don’t overestimate your margins.

To tabulate your total true costs, you need to write down the costs in the following areas:

• Target price
• Supplier cost of the product
• Total cost per unit
• Net profit per unit
• Profit margin per unit

Once you complete the pricing portion, you’ll have everything on one sheet and readily accessible whenever you need it.

Marketing Plan and Operations

So, now you’ve concluded that you have a great business idea, and it’s in a growing market. That’s fantastic – but how are you going to drive traffic to your ecommerce website and get customers to buy it ? And how much can you afford to spend on your product?

Marketing  is everything. It’s important that your marketing efforts match your business model.

If you have a website and no marketing, your site won’t have any visitors. With no visitors, you will make no sales. Then how do you grow and sell your ecommerce business (if that’s your long-term goal)? Even with the best possible products, nobody will buy them if they aren’t directed to them in some way.

In order to come up with a marketing strategy, you need to first know your customer inside out. You should be able to answer such questions as:

• How old is your customer?
• Where does your customer live?
• What is the population of your customer base?
• What is their education level?
• What is their income level?
• What are your customer’s pain points?

With so many channels to reach your customer, which one is best for you?

Once we know pretty much everything there is to know about our target customer, we can shift focus to our marketing strategy. You want to choose marketing strategies that equal positive conversion rates. What channels should you use to grab the attention of your customer demographic? Some of the key marketing channels include:

Paid Marketing

• Pay-per-click – this online marketing typically involves using Google Shopping campaigns  and managing a product data feed.
• Affiliate sales networks – Allowing other blogs and websites to sell your product for a cut of the revenue. List the different affiliate sale networks that you plan to promote through.
• Facebook ads ⎯ Ads posted on Facebook to draw in buyers through social media means.
• Influencer marketing ⎯ Hiring industry influencers to get the word out about your product through their social media platforms and contacts.

Organic Marketing

• Social media (Facebook, Instagram , Pinterest, etc.): What is your strategy for social media, and where will you dedicate your attention?
• Search Engine Optimization : Create and promote awesome content so people find your product organically through search.
• Content marketing: Figure out how you’ll use content marketing in your business. Consider various article topics that will persuade your target audience to buy your products.
• Blogger networks: could be organic or paid through affiliate sale programs.
• Key bloggers: Develop a list of the key bloggers in your product category. For Atlas Hiking Co., this might be an influencer that blogs about the best hiking trails in America.

Finding the optimal mix of these advertising tools depends 100% on your customer segment as well as your product type. For example, a SaaS product targeting millennials will require an entirely different marketing strategy than an e-commerce physical product targeting baby boomers. Perhaps that should be a post on its own for another day!

How much should you spend to acquire a customer?

In order to understand this, we need first to discuss a concept known as customer lifetime value or LTV. In essence, this is a formula that helps you better understand how much an average customer will spend over time.

Here’s  a good read on how to calculate LTV.

It’s important to remember that for new businesses, you don’t have a lot of data on customer purchase habits so it’s a good idea to be more conservative with your assumptions in calculating LTV.

Let’s say, for Atlas Hiking Co., I determine that the average LTV per customer is $300. This means that over time, the average customer will spend $300. Let’s say, on average, if I receive $300 in revenue, $100 of that will translate to gross profit before I factor in my marketing costs (basically, I’m just subtracting the cost of making the shirts).

Knowing that my gross profit is $100 per shirt is a critical piece of information because it tells me that I can spend up to $100 in marketing to acquire a customer and still be profitable!

Some of the marketing options include social media marketing and content marketing.

Think about your business model and then line up your marketing budget. Your marketing budget may include the following items:

• Sales/branded content
• SEO/blog content
• Facebook/Instagram ads
• Influencer marketing
• Marketing tools
• Niche advertising

Choosing The Right Technology

With so much technology and SaaS products out there, it’s important to understand the various moving parts and diagram how they all integrate with one another.

Some of the different elements include:

• Shopping Cart Platforms  – e.g., Shopify , BigCommerce , WooCommerce , or any open-source platform
• Hosting – Nexcess , Kinsta , WPX
• Payment Processo r – e.g., Stripe, Paypal
• Fulfillment Center – e.g., Amazon, ShipBob
• Apps – e.g., Zipify, BuildWooFunnels, Gelato
• Accounting & Taxes  – e.g., Quicken, Xero
• Marketing Automation – e.g., Klaviyo , Mailchimp
• Marketing Tools – e.g.  Buzzstream, Ahrefs
• Customer Loyalty Programs  – e.g., Antavo, Smile

Come up with a detailed list of the different products and services you need to run your business as well as the monthly and per-transaction cost of each of them. This will be important in understanding the impact of these services on your margins.

Matching your business model to your technology is essential, too. Certain website platforms are better suited for specific sales models.

Email marketing is another type of technology that should be carefully considered and matched up correctly with your business model.

Keep in mind that it takes, on average, 6-7 interactions with a brand before someone makes a purchase, so you need to keep using technology to get them back to your website.

As you explore the technology options and find out ways to draw potential customers in and keep them happy while they’re there, here are some key points to keep in mind:

• What you say about yourself and your products with your website content
• How you respond to questions on live chat and email support
• How to make use of chatbots
• How you connect on social media
• The information you send through email marketing
• What bloggers and influencers say about your brand
• How existing customers review your company
• How you advertise
• How you establish loyalty beyond sales

After you figure out your technology methods, you have to come up with a technology budget.

The business plan must also include the operations side of things. Determine who will be your manufacturer, secondary manufacturer, and shipping and fulfillment  provider.

When looking at supply chain costs and options, ShipBob  is an ecommerce fulfillment provider you can consider.

Financial Plan

When figuring out your financial plan, evaluating and pinpointing your startup costs  is essential.

The focus of the financial plan is how long it will take for you to make your money back. You also need to figure out if you need a business loan .

Traffic and conversion rates will help you determine how long it will be until you start making money back.

You’ll also want to use an income statement to detail financial information.

This section is used for financial projections, such as forecasting sales, expenses, and net income of the business. Ideally, you’ll want to create a monthly Excel balance sheet showing the following:

• Projected revenue:  First, come up with your projected number of units sold and then come up with your projected revenue (Projected Revenue = # of Units Sold * Average Sales Price).
• Fixed expenses:   these are expenses that are fixed no matter how much you sell. Typically, these relate to monthly SaaS subscriptions, employee salaries, or rent.
• Variable expenses  – these expenses change in direct proportion to how much you sell. Common examples include the cost of goods sold and credit card payment processing fees.

This helps business owners better understand what they need to achieve to hit their profit goals. In reality, projections are usually always off the mark, but it’s good to give yourself some measurable goals to strive for.

This section should aim to answer the following questions about your product offering:

• How much product do you need to sell per year to meet your income goals for the business?
• What are the margins on your product? If you sell one hiking shirt for $50, how much do you make after paying your supplier, employees, and marketing costs?
• What is the lifetime value of a customer?
• How much can you spend to acquire customers? If you conservatively project that the average customer will spend $300 over time on your shirts, then you can afford to spend an amount less than $300 to acquire that customer using the paid marketing channels described previously.
• Do you have any big capital expenditures early on that would require you to need to bring in investors?
• Can you improve gross margins by making bigger orders from your suppliers?

There are various acquisition channels that will help your traffic to convert including:

Your revenue plan will contain a 12-month revenue forecast plan to help you map out each month of earnings.

There are different business earning models you can go through to determine how much you can make with your business.

You want to calculate how much traffic costs. This all depends on the methods you use to gain traffic to your site.

As you determine what your profit might be with your ecommerce business  or ecommerce businesses, there are certain math formulas to use:

• The profit equation
• Break-even analysis
• Units needed to achieve the profit target

You should also consider how you will use fintech companies in your ecommerce business.

What are the key elements of an ecommerce business plan?

The main components of an eCommerce business plan include the executive summary, company description, market analysis, organization and management structure, product line or service, marketing and sales strategy, financial projections, and funding request, if applicable.

How do I create a budget for my ecommerce business?

Start by estimating your initial startup costs and ongoing expenses. Consider costs like website development, inventory, marketing, shipping, taxes, and any necessary licenses or permits. It’s also important to factor in a contingency plan for unexpected costs.

How do I find the right product to sell?

Research is fundamental. Look at market trends, customer needs, and competitor products. Use tools like Google Trends or social media platforms to understand what customers are currently interested in. Always consider your passion and knowledge about the product too, as this can drive your business forward.

How can I differentiate my product from competitors?

Differentiation can come from unique product features, superior customer service, better pricing, or a compelling brand story. Understand what your competitors offer and how you can do it differently or better.

Wrapping Up Your Business Plan

Careful planning is crucial to get your e-commerce business from the planning phase to the launch phase and to ensure its successful future.

Going through the exercise of writing a business plan will cement your own understanding of your business and your market. It will also position you to take advantage of lucrative opportunities while mitigating harmful threats to your business down the line.

Your turn! Have you written a business plan for your online store? Do you have anything to add? Tell us about it in the comments below!

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Budgeting and business planning

Once your business is operational, it's essential to plan and tightly manage its financial performance. Creating a budgeting process is the most effective way to keep your business - and its finances - on track.

This guide outlines the advantages of business planning and budgeting and explains how to go about it. It suggests action points to help you manage your business' financial position more effectively and ensure your plans are practical.

Planning for business success

The benefits, what to include in your annual plan, a typical business planning cycle, budgets and business planning, benefits of a business budget, creating a budget, key steps in drawing up a budget, what your budget should cover, what your budget will need to include, use your budget to measure performance, review your budget regularly.

When you're running a business, it's easy to get bogged down in day-to-day problems and forget the bigger picture. However, successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance.

Structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving profits, reducing costs and increasing returns on investment.

In fact, even without a formal process, many businesses carry out the majority of the activities associated with business planning, such as thinking about growth areas, competitors, cashflow and profit.

Converting this into a cohesive process to manage your business' development doesn't have to be difficult or time-consuming. The most important thing is that plans are made, they are dynamic and are communicated to everyone involved. See the page in this guide on what to include in your annual plan.

The key benefit of business planning is that it allows you to create a focus for the direction of your business and provides targets that will help your business grow. It will also give you the opportunity to stand back and review your performance and the factors affecting your business. Business planning can give you:

• a greater ability to make continuous improvements and anticipate problems
• sound financial information on which to base decisions
• improved clarity and focus
• a greater confidence in your decision-making

The main aim of your annual business plan is to set out the strategy and action plan for your business. This should include a clear financial picture of where you stand - and expect to stand - over the coming year. Your annual business plan should include:

• an outline of changes that you want to make to your business
• potential changes to your market, customers and competition
• your objectives and goals for the year
• your key performance indicators
• any issues or problems
• any operational changes
• information about your management and people
• your financial performance and forecasts
• details of investment in the business

Business planning is most effective when it's an ongoing process. This allows you to act quickly where necessary, rather than simply reacting to events after they've happened.

• Review your current performance against last year/current year targets.
• Work out your opportunities and threats.
• Analyse your successes and failures during the previous year.
• Look at your key objectives for the coming year and change or re-establish your longer-term planning.
• Identify and refine the resource implications of your review and build a budget.
• Define the new financial year's profit-and-loss and balance-sheet targets.
• Conclude the plan.
• Review it regularly - for example, on a monthly basis - by monitoring performance, reviewing progress and achieving objectives.
• Go back to 1.

New small business owners may run their businesses in a relaxed way and may not see the need to budget. However, if you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cashflow, allowing you to invest in new opportunities at the appropriate time.

If your business is growing, you may not always be able to be hands-on with every part of it. You may have to split your budget up between different areas such as sales, production, marketing etc. You'll find that money starts to move in many different directions through your organisation - budgets are a vital tool in ensuring that you stay in control of expenditure.

A budget is a plan to:

• control your finances
• ensure you can continue to fund your current commitments
• enable you to make confident financial decisions and meet your objectives
• ensure you have enough money for your future projects

It outlines what you will spend your money on and how that spending will be financed. However, it is not a forecast. A forecast is a prediction of the future whereas a budget is a planned outcome of the future - defined by your plan that your business wants to achieve.

There are a number of benefits of drawing up a business budget, including being better able to:

• manage your money effectively
• allocate appropriate resources to projects
• monitor performance
• meet your objectives
• improve decision-making
• identify problems before they occur - such as the need to raise finance or cash flow difficulties
• plan for the future
• increase staff motivation

Creating, monitoring and managing a budget is key to business success. It should help you allocate resources where they are needed, so that your business remains profitable and successful. It need not be complicated. You simply need to work out what you are likely to earn and spend in the budget period.

Begin by asking these questions:

• What are the projected sales for the budget period? Be realistic - if you overestimate, it will cause you problems in the future.
• What are the direct costs of sales – i.e. costs of materials, components or subcontractors to make the product or supply the service?
• What are the fixed costs or overheads?

You should break down the fixed costs and overheads by type, e.g.:

• cost of premises, including rent, municipal taxes and service charges
• staff costs –e.g. wages, benefits, Québec Parental Insurance Plan (QPIP) premiums, contributions to the Québec Pension Plan (QPP) and to the financing of the Commission des normes du travail (CNT)
• utilities – e.g. heating, lighting, telephone
• printing, postage and stationery
• vehicle expenses
• equipment costs
• advertising and promotion
• travel and subsistence expenses
• legal and professional costs, including insurance

Your business may have different types of expenses, and you may need to divide up the budget by department. Don't forget to add in how much you need to pay yourself, and include an allowance for tax.

Your business plan should help in establishing projected sales, cost of sales, fixed costs and overheads, so it would be worthwhile preparing this first. See the page in this guide on planning for business success.

Once you've got figures for income and expenditure, you can work out how much money you're making. You can look at costs and work out ways to reduce them. You can see if you are likely to have cash flow problems, giving yourself time to do something about them.

When you've made a budget, you should stick to it as far as possible, but review and revise it as needed. Successful businesses often have a rolling budget, so that they are continually budgeting, e.g. for a year in advance.

There are a number of key steps you should follow to make sure your budgets and plans are as realistic and useful as possible.

Make time for budgeting

If you invest some time in creating a comprehensive and realistic budget, it will be easier to manage and ultimately more effective.

Use last year's figures - but only as a guide

Collect historical information on sales and costs if they are available - these could give you a good indication of likely sales and costs. But it's also essential to consider what your sales plans are, how your sales resources will be used and any changes in the competitive environment.

Create realistic budgets

Use historical information, your business plan and any changes in operations or priorities to budget for overheads and other fixed costs.

It's useful to work out the relationship between variable costs and sales and then use your sales forecast to project variable costs. For example, if your unit costs reduce by 10 per cent for each additional 20 per cent of sales, how much will your unit costs decrease if you have a 33 per cent rise in sales?

Make sure your budgets contain enough information for you to easily monitor the key drivers of your business such as sales, costs and working capital. Accounting software can help you manage your accounts.

Involve the right people

It's best to ask staff with financial responsibilities to provide you with estimates of figures for your budget - for example, sales targets, production costs or specific project control. If you balance their estimates against your own, you will achieve a more realistic budget. This involvement will also give them greater commitment to meeting the budget.

Decide how many budgets you really need. Many small businesses have one overall operating budget which sets out how much money is needed to run the business over the coming period - usually a year. As your business grows, your total operating budget is likely to be made up of several individual budgets such as your marketing or sales budgets.

Projected cash flow  -your cash budget projects your future cash position on a month-by-month basis. Budgeting in this way is vital for small businesses as it can pinpoint any difficulties you might be having. It should be reviewed at least monthly.

Costs  - typically, your business will have three kinds of costs:

• fixed costs - items such as rent, salaries and financing costs
• variable costs - including raw materials and overtime
• one-off capital costs - purchases of computer equipment or premises, for example

To forecast your costs, it can help to look at last year's records and contact your suppliers for quotes.

Revenues  - sales or revenue forecasts are typically based on a combination of your sales history and how effective you expect your future efforts to be.

Using your sales and expenditure forecasts, you can prepare projected profits for the next 12 months. This will enable you to analyse your margins and other key ratios such as your return on investment.

If you base your budget on your business plan, you will be creating a financial action plan. This can serve several useful functions, particularly if you review your budgets regularly as part of your annual planning cycle.

Your budget can serve as:

• an indicator of the costs and revenues linked to each of your activities
• a way of providing information and supporting management decisions throughout the year
• a means of monitoring and controlling your business, particularly if you analyse the differences between your actual and budgeted income

Benchmarking performance

Comparing your budget year on year can be an excellent way of benchmarking your business' performance - you can compare your projected figures, for example, with previous years to measure your performance.

You can also compare your figures for projected margins and growth with those of other companies in the same sector, or across different parts of your business.

Key performance indicators

To boost your business' performance you need to understand and monitor the key "drivers" of your business - a driver is something that has a major impact on your business. There are many factors affecting every business' performance, so it is vital to focus on a handful of these and monitor them carefully.

The three key drivers for most businesses are:

• working capital

Any trends towards cash flow problems or falling profitability will show up in these figures when measured against your budgets and forecasts. They can help you spot problems early on if they are calculated on a consistent basis.

To use your budgets effectively, you will need to review and revise them frequently. This is particularly true if your business is growing and you are planning to move into new areas.

Using up to date budgets enables you to be flexible and also lets you manage your cash flow and identify what needs to be achieved in the next budgeting period.

Two main areas to consider

Your actual income  - each month compare your actual income with your sales budget, by:

• analysing the reasons for any shortfall - for example lower sales volumes, flat markets, underperforming products
• considering the reasons for a particularly high turnover - for example whether your targets were too low
• comparing the timing of your income with your projections and checking that they fit

Analysing these variations will help you to set future budgets more accurately and also allow you to take action where needed.

Your actual expenditure  - regularly review your actual expenditure against your budget. This will help you to predict future costs with better reliability. You should:

• look at how your fixed costs differed from your budget
• check that your variable costs were in line with your budget - normally variable costs adjust in line with your sales volume
• analyse any reasons for changes in the relationship between costs and turnover
• analyse any differences in the timing of your expenditure, for example by checking suppliers' payment terms

Original document, Budgeting and business planning , © Crown copyright 2009 Source: Business Link UK (now GOV.UK/Business ) Adapted for Québec by Info entrepreneurs

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated July 29, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan

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Simple Business Plan Template (2024)

Updated: May 4, 2024, 4:37pm

Table of Contents

Why business plans are vital, get your free simple business plan template, how to write an effective business plan in 6 steps, frequently asked questions.

While taking many forms and serving many purposes, they all have one thing in common: business plans help you establish your goals and define the means for achieving them. Our simple business plan template covers everything you need to consider when launching a side gig, solo operation or small business. By following this step-by-step process, you might even uncover a few alternate routes to success.

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Whether you’re a first-time solopreneur or a seasoned business owner, the planning process challenges you to examine the costs and tasks involved in bringing a product or service to market. The process can also help you spot new income opportunities and hone in on the most profitable business models.

Though vital, business planning doesn’t have to be a chore. Business plans for lean startups and solopreneurs can simply outline the business concept, sales proposition, target customers and sketch out a plan of action to bring the product or service to market. However, if you’re seeking startup funding or partnership opportunities, you’ll need a write a business plan that details market research, operating costs and revenue forecasting. Whichever startup category you fall into, if you’re at square one, our simple business plan template will point you down the right path.

Copy our free simple business plan template so you can fill in the blanks as we explore each element of your business plan. Need help getting your ideas flowing? You’ll also find several startup scenario examples below.

Download free template as .docx

Whether you need a quick-launch overview or an in-depth plan for investors, any business plan should cover the six key elements outlined in our free template and explained below. The main difference in starting a small business versus an investor-funded business is the market research and operational and financial details needed to support the concept.

1. Your Mission or Vision

Start by declaring a “dream statement” for your business. You can call this your executive summary, vision statement or mission. Whatever the name, the first part of your business plan summarizes your idea by answering five questions. Keep it brief, such as an elevator pitch. You’ll expand these answers in the following sections of the simple business plan template.

• What does your business do? Are you selling products, services, information or a combination?
• Where does this happen? Will you conduct business online, in-store, via mobile means or in a specific location or environment?
• Who does your business benefit? Who is your target market and ideal customer for your concept?
• Why would potential customers care? What would make your ideal customers take notice of your business?
• How do your products and/or services outshine the competition? What would make your ideal customers choose you over a competitor?

These answers come easily if you have a solid concept for your business, but don’t worry if you get stuck. Use the rest of your plan template to brainstorm ideas and tactics. You’ll quickly find these answers and possibly new directions as you explore your ideas and options.

2. Offer and Value Proposition

This is where you detail your offer, such as selling products, providing services or both, and why anyone would care. That’s the value proposition. Specifically, you’ll expand on your answers to the first and fourth bullets from your mission/vision.

As you complete this section, you might find that exploring value propositions uncovers marketable business opportunities that you hadn’t yet considered. So spend some time brainstorming the possibilities in this section.

For example, a cottage baker startup specializing in gluten-free or keto-friendly products might be a value proposition that certain audiences care deeply about. Plus, you could expand on that value proposition by offering wedding and other special-occasion cakes that incorporate gluten-free, keto-friendly and traditional cake elements that all guests can enjoy.

3. Audience and Ideal Customer

Here is where you explore bullet point number three, who your business will benefit. Identifying your ideal customer and exploring a broader audience for your goods or services is essential in defining your sales and marketing strategies, plus it helps fine-tune what you offer.

There are many ways to research potential audiences, but a shortcut is to simply identify a problem that people have that your product or service can solve. If you start from the position of being a problem solver, it’s easy to define your audience and describe the wants and needs of your ideal customer for marketing efforts.

Using the cottage baker startup example, a problem people might have is finding fresh-baked gluten-free or keto-friendly sweets. Examining the wants and needs of these people might reveal a target audience that is health-conscious or possibly dealing with health issues and willing to spend more for hard-to-find items.

However, it’s essential to have a customer base that can support your business. You can be too specialized. For example, our baker startup can attract a broader audience and boost revenue by offering a wider selection of traditional baked goods alongside its gluten-free and keto-focused specialties.

4. Revenue Streams, Sales Channels and Marketing

Thanks to our internet-driven economy, startups have many revenue opportunities and can connect with target audiences through various channels. Revenue streams and sales channels also serve as marketing vehicles, so you can cover all three in this section.

Revenue Streams

Revenue streams are the many ways you can make money in your business. In your plan template, list how you’ll make money upon launch, plus include ideas for future expansion. The income possibilities just might surprise you.

For example, our cottage baker startup might consider these revenue streams:

• Product sales : Online, pop-up shops , wholesale and (future) in-store sales
• Affiliate income : Monetize blog and social media posts with affiliate links
• Advertising income : Reserve website space for advertising
• E-book sales : (future) Publish recipe e-books targeting gluten-free and keto-friendly dessert niches
• Video income : (future) Monetize a YouTube channel featuring how-to videos for the gluten-free and keto-friendly dessert niches
• Webinars and online classes : (future) Monetize coaching-style webinars and online classes covering specialty baking tips and techniques
• Members-only content : (future) Monetize a members-only section of the website for specialty content to complement webinars and online classes
• Franchise : (future) Monetize a specialty cottage bakery concept and sell to franchise entrepreneurs

Sales Channels

Sales channels put your revenue streams into action. This section also answers the “where will this happen” question in the second bullet of your vision.

The product sales channels for our cottage bakery example can include:

• Mobile point-of-sale (POS) : A mobile platform such as Shopify or Square POS for managing in-person sales at local farmers’ markets, fairs and festivals
• E-commerce platform : An online store such as Shopify, Square or WooCommerce for online retail sales and wholesale sales orders
• Social media channels : Facebook, Instagram and Pinterest shoppable posts and pins for online sales via social media channels
• Brick-and-mortar location : For in-store sales , once the business has grown to a point that it can support a physical location

Channels that support other income streams might include:

• Affiliate income : Blog section on the e-commerce website and affiliate partner accounts
• Advertising income : Reserved advertising spaces on the e-commerce website
• E-book sales : Amazon e-book sales via Amazon Kindle Direct Publishing
• Video income : YouTube channel with ad monetization
• Webinars and online classes : Online class and webinar platforms that support member accounts, recordings and playback
• Members-only content : Password-protected website content using membership apps such as MemberPress

Nowadays, the line between marketing and sales channels is blurred. Social media outlets, e-books, websites, blogs and videos serve as both marketing tools and income opportunities. Since most are free and those with advertising options are extremely economical, these are ideal marketing outlets for lean startups.

However, many businesses still find value in traditional advertising such as local radio, television, direct mail, newspapers and magazines. You can include these advertising costs in your simple business plan template to help build a marketing plan and budget.

5. Structure, Suppliers and Operations

This section of your simple business plan template explores how to structure and operate your business. Details include the type of business organization your startup will take, roles and responsibilities, supplier logistics and day-to-day operations. Also, include any certifications or permits needed to launch your enterprise in this section.

Our cottage baker example might use a structure and startup plan such as this:

• Business structure : Sole proprietorship with a “doing business as” (DBA) .
• Permits and certifications : County-issued food handling permit and state cottage food certification for home-based food production. Option, check into certified commercial kitchen rentals.
• Roles and responsibilities : Solopreneur, all roles and responsibilities with the owner.
• Supply chain : Bulk ingredients and food packaging via Sam’s Club, Costco, Amazon Prime with annual membership costs. Uline for shipping supplies; no membership needed.
• Day-to-day operations : Source ingredients and bake three days per week to fulfill local and online orders. Reserve time for specialty sales, wholesale partner orders and market events as needed. Ship online orders on alternating days. Update website and create marketing and affiliate blog posts on non-shipping days.

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6. Financial Forecasts

Your final task is to list forecasted business startup and ongoing costs and profit projections in your simple business plan template. Thanks to free business tools such as Square and free marketing on social media, lean startups can launch with few upfront costs. In many cases, cost of goods, shipping and packaging, business permits and printing for business cards are your only out-of-pocket expenses.

Cost Forecast

Our cottage baker’s forecasted lean startup costs might include:

Gross Profit Projections

This helps you determine the retail prices and sales volume required to keep your business running and, hopefully, earn income for yourself. Use product research to spot target retail prices for your goods, then subtract your cost of goods, such as hourly rate, raw goods and supplier costs. The total amount is your gross profit per item or service.

Here are some examples of projected gross profits for our cottage baker:

Bottom Line

Putting careful thought and detail in a business plan is always beneficial, but don’t get so bogged down in planning that you never hit the start button to launch your business . Also, remember that business plans aren’t set in stone. Markets, audiences and technologies change, and so will your goals and means of achieving them. Think of your business plan as a living document and regularly revisit, expand and restructure it as market opportunities and business growth demand.

Is there a template for a business plan?

You can copy our free business plan template and fill in the blanks or customize it in Google Docs, Microsoft Word or another word processing app. This free business plan template includes the six key elements that any entrepreneur needs to consider when launching a new business.

What does a simple business plan include?

A simple business plan is a one- to two-page overview covering six key elements that any budding entrepreneur needs to consider when launching a startup. These include your vision or mission, product or service offering, target audience, revenue streams and sales channels, structure and operations, and financial forecasts.

How can I create a free business plan template?

Start with our free business plan template that covers the six essential elements of a startup. Once downloaded, you can edit this document in Google Docs or another word processing app and add new sections or subsections to your plan template to meet your specific business plan needs.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Krista Fabregas is a seasoned eCommerce and online content pro sharing more than 20 years of hands-on know-how with those looking to launch and grow tech-forward businesses. Her expertise includes eCommerce startups and growth, SMB operations and logistics, website platforms, payment systems, side-gig and affiliate income, and multichannel marketing. Krista holds a bachelor's degree in English from The University of Texas at Austin and held senior positions at NASA, a Fortune 100 company, and several online startups.

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Write your business plan

Business plans help you run your business.

A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business.

Business plans can help you get funding or bring on new business partners. Investors want to feel confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.

Pick a business plan format that works for you

There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.

Most business plans fall into one of two common categories: traditional or lean startup.

Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. They tend to require more work upfront and can be dozens of pages long.

Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page.

Traditional business plan

Lean startup plan

Traditional business plan format

You might prefer a traditional business plan format if you’re very detail-oriented, want a comprehensive plan, or plan to request financing from traditional sources.

When you write your business plan, you don’t have to stick to the exact business plan outline. Instead, use the sections that make the most sense for your business and your needs. Traditional business plans use some combination of these nine sections.

Executive summary

Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.

Company description

Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.

Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Your company description is the place to boast about your strengths.

Market analysis

You'll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now's the time to answer these questions.

Organization and management

Tell your reader how your company will be structured and who will run it.

Describe the  legal structure  of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you're a sole proprietor or limited liability company (LLC).

Use an organizational chart to lay out who's in charge of what in your company. Show how each person's unique experience will contribute to the success of your venture. Consider including resumes and CVs of key members of your team.

Service or product line

Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you're doing  research and development  for your service or product, explain it in detail.

Marketing and sales

There's no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs.

Your goal in this section is to describe how you'll attract and retain customers. You'll also describe how a sale will actually happen. You'll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.

Funding request

If you're asking for funding, this is where you'll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you'll use it for.

Specify whether you want debt or equity, the terms you'd like applied, and the length of time your request will cover. Give a detailed description of how you'll use your funds. Specify if you need funds to buy equipment or materials, pay salaries, or cover specific bills until revenue increases. Always include a description of your future strategic financial plans, like paying off debt or selling your business.

Financial projections

Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success.

If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. If you have other collateral you could put against a loan, make sure to list it now.

Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. Make sure to clearly explain your projections, and match them to your funding requests.

This is a great place to use graphs and charts to tell the financial story of your business.  

Use your appendix to provide supporting documents or other materials were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.

Example traditional business plans

Before you write your business plan, read the following example business plans written by fictional business owners. Rebecca owns a consulting firm, and Andrew owns a toy company.

Lean startup format

You might prefer a lean startup format if you want to explain or start your business quickly, your business is relatively simple, or you plan to regularly change and refine your business plan.

Lean startup formats are charts that use only a handful of elements to describe your company’s value proposition, infrastructure, customers, and finances. They’re useful for visualizing tradeoffs and fundamental facts about your company.

There are different ways to develop a lean startup template. You can search the web to find free templates to build your business plan. We discuss nine components of a model business plan here:

Key partnerships

Note the other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers, subcontractors, and similar strategic partners.

Key activities

List the ways your business will gain a competitive advantage. Highlight things like selling direct to consumers, or using technology to tap into the sharing economy.

Key resources

List any resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property. Don’t forget to leverage business resources that might be available to  women ,  veterans ,  Native Americans , and  HUBZone businesses .

Value proposition

Make a clear and compelling statement about the unique value your company brings to the market.

Customer relationships

Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience from start to finish.

Customer segments

Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of whom your business will serve.

List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.

Cost structure

Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.

Revenue streams

Explain how your company will actually make money. Some examples are direct sales, memberships fees, and selling advertising space. If your company has multiple revenue streams, list them all.

Example lean business plan

Before you write your business plan, read this example business plan written by a fictional business owner, Andrew, who owns a toy company.

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How to Master the Fine Art of Business Planning and Budgeting

Updated on: 5 January 2023

Starting a business is a challenging thing: you have to work hard and do your best to ensure its success. However, the work doesn’t end even when your business actually becomes operational. You still have to do so much more to ensure that it will keep on track.

Of course, it could be hard, especially for the beginners. It seems that you have to keep an eye on so many things and focus on so many urgent tasks every day that there isn’t any time left for business planning and budgeting. However, it is very important to find that time, because business planning and budgeting are actually one of the most important things for business success.

Why so? Because a plan allows you to get a better understanding of how you see your business, how you want to develop it, and so on. When you create a plan, you set targets that you want to achieve as well as define the ways of evaluating the success of your business.

Basically, planning gives you all the necessary tools that you can use to improve your business in the nearest future. However, this happens only when planning is done correctly.

What to Include in Your Annual Plan?

If you want to create a perfect business plan, you have to know what has to be included in it and how big it will be. Of course, there are no strict limitations to a size of a business plan as each business is different. However, if you are doing it for the first time, I recommend starting with a yearly plan: it is not too big and not too short.

A good annual plan has to include the following things:

• an executive summary
• a list of products and services you offer (or plan to offer this year)
• a detailed description of your target market
• a financial plan
• a marketing plan as well as a sales plan
• milestones and metrics
• a description of your management team

In order to write it in the best way possible, you need to spend some time thinking about the current status of your company as well as how it should look like by the end of the year. Describe your target market, think about the goals that have to be achieved this year, about the products and services that have to be launched.

Visualize the information to make it easier for you to see the whole picture (this is especially important for those, who don’t have much experience in planning). You can use charts, and different diagram types such as mind maps to visualize and organize your ideas and plans.

Try choosing a few main goals for your company and add them to the annual plan being as specific as possible: for example, if you want to increase your earnings, you should specify by how much (10%, 15%, etc.). It’s also good to think about the obstacles you might face and come up with some ways to minimize the potential risks that could occur.

Remember that while a business plan has to be specific and detailed when you write it, it shouldn’t remain static by the end of the year. No business is predictable enough for this to happen: you should understand it and prepare to act quickly, adding changes to a business plan if something unexpected happens.

Business Planning Cycle

As I said, typical business planning isn’t a static thing – actually, it’s a cycle that usually looks like this:

• You take some time to evaluate the effectiveness of your business. In order to do so, you should compare its current performance with the last year’s one – or with targets set earlier this year.
• Then you have to think about opportunities that might appear as well as the threats you might face.
• Remember about both successes and failures your business experienced throughout last year. Analyze them and think what can be done to repeat/avoid them.
• Think of the main business goals you would like to achieve and be sure to add them to the new annual plan (or edit the old one according to them).
• Create a budget.
• Come up with budget targets.
• Complete the plan.
• Be sure to review it regularly (every month, every three months, etc.), making changes if necessary.

Repeat the whole cycle.

Business Planning and Budgeting

When a business is still small and growing, it might seem unnecessary to plan its budget. However, it’s crucial if you want to avoid financial risks and be able to invest in opportunities when they appear.

Moreover, with the rapid growth of your business, you might find yourself in a situation where you aren’t able to control all the money anymore. Expansion of the business usually includes the creation of different departments responsible for different things – and each of these departments needs to have its own budget.

As you see, the bigger your business becomes, the more complicated it gets. While it’s okay to not control every cent by yourself, it is still up to you to make sure that your business keeps growing instead of becoming unprofitable. That’s why it’s so important to create a budget plan that allows you to understand the exact income your business brings by the end of the month and the amount of it, you are able to save or spend on different things.

It is important to remember that a business plan is not a forecast in any way. It doesn’t predict how much money you’ll make by the end of the year. Instead, it’s a tool for ensuring that your business will remain profitable even after covering all the necessary expenses.

Moreover, a business plan also ensures that you’ll have the opportunity to invest money into future projects, fund everything that has to be funded this year, and meet all of the business objectives.

Benefits of a Business Budget

The whole budget planning has a lot of benefits:

It allows you to evaluate the success of your business: when you know exactly how much profit your business gave you at the beginning of the year, you are able to compare it with the profit by the end of the year, understanding whether your financial goals have been met or not.

It allows managing money effectively: for example, if you save money for predicted one-time spends, you won’t be caught by surprise by them.

It helps identify the problems before they actually happen: for example, if you evaluate your budget and see that the income left after covering all the expenses is quite small, you’ll understand that you need to make more profit this year.

It helps make smarter decisions, by only investing money that you can afford to invest.

It allows you to manage your business more effectively, allocating more resources to the projects that need them the most.

It helps in increasing staff motivation.

Basically, when you have a budget plan ready, you have your back covered.

How to Create a Budget?

There are so many articles written on how to create a perfect business budget, but most of them narrow down to these 5 simple things:

• Evaluate your sources of income. You have to find out how much money your business brings on a daily basis in order to understand how much money you can afford to invest and spend.
• Make a list of your fixed expenses. These ones repeat every month and their amount doesn’t change. Some people forget to exclude the sum needed to cover these expenses from the monthly income, but it’s important to do so in order to get a clear understanding of your budget.
• Don’t forget about variable expenses. These ones don’t have a fixed price but still have to be paid every month. Come up with an approximate sum you’ll have to pay and include it in your budget.
• Predict your one-time expenses. Every business needs them from time to time, but if you plan your budget forgetting about these expenses, spending money on them could affect it greatly and not in a positive way.
• When you list all the income and expense sources, it’s time to pull them all together. Evaluate how much money you’ll have each month after you cover all these expenses. Then think of what part of that sum you could afford to invest into something.

While a whole process of budget creation might seem too complicated, you still should find time to do it. It’s totally worth the effort – moreover, such a plan could help you not only throughout the next month but also throughout the next year (if your expense and income sources won’t change much).

Of course, it’s still important to review it from time to time, making changes when necessary. However, the review process won’t be as complicated as the creation of a budget plan from scratch.

Key Steps in Drawing up a Budget

If you’ve never created a budget plan before, you could make some budgeting mistakes . However, when it comes to financial planning, the smallest mistake could have a negative impact. The following tips can help you easily avoid most mistakes, making your budget plan more realistic.

• Try to take it slow

The more time you spend on budgeting, the better it is for you. It’s hard to create a flawless budget plan quickly: there’s a big chance you might miss something. That’s why it’s vital to make sure that you’ve listed all the sources of your income and expenses, and are prepared well.

• You can use last year’s data

Last year’s data could help you see the whole picture better: you can compare it with this year’s data, finding out whether your income has increased or decreased. However, you should use it only for comparing and as a guide. You have new goals and resources this year, and the environment you’re working in has changed too, so your current planning and strategies should differ from the ones you used last year.

• Make sure that a budget is realistic

The most important thing about a budget plan is that it has to cover not only predictable expenses but also less predictable ones. Of course, making predictions is hard but using previous data along with some other business plans as examples could make the whole process easier.

A budget also has to be detailed: the information it contains has to allow you to monitor all the key details of your business, be it sales, costs, and so on. You could also use some accounting software for more effective management.

• It’s okay to involve people

If your business is big enough, you probably have some employees responsible for a part of the financial operations. It’s good to involve them in a budget creation process too, using their knowledge and experience to predict some expenses, for example. If the people you involve are experienced enough, the combination of their professionalism and your knowledge will make a budget more realistic and effective.

• Visualizing helps

Various charts and diagrams are so popular in business for a reason: they allow tracking your incomes and expenses easily. For example, you can create one chart based on your plan and another chart based on an actual budget and compare them during planned revisions to see whether your budget plan works just as expected or not.

As I mentioned above, it’s easier to control finances when you are running a small business. Such business needs only one budget that is created for a certain period – in most cases, for a year. Larger businesses, however, require something else. They have various departments, so it is better to create several budgets at once, tailoring each of them to a certain department’s needs.

Don’t Forget to Review!

I’ve already mentioned that a review is an important process of every business planning and budgeting. No matter how good your plan is, it is impossible to predict everything with 100 percent accuracy. Your business will grow and the environment around it will change, so the quicker you’ll react to such changes, the better it is for you.

That’s why you should schedule budget reviews from time to time. I recommend starting with reviewing it every month and then switching to a more comfortable schedule. Every month review can help you notice the flaws of your plan (which is especially important if you don’t have much experience in this kind of thing) as well as understand how stable your business is.

If you see that you don’t have to make changes often, you could start reviewing your plan every three or six months (however, I recommend doing it more often).

You can use various common diagrams to help you . The best thing about diagrams is that they help visualize data well, which is very important when you need to see the whole picture more clearly – and this happens often during budget planning. For example, a diagram or a chart of your company’s income can show you how much your finances have grown during a certain period. Moreover, if you notice certain downfalls in a chart (that aren’t predicted), you’ll be able to react to it quickly, fixing things that went wrong.

What do you need to consider during the whole review process? First, your actual income. Probably it will be different each month: every business has its own peak sales periods and drop sales ones, and you have to find them and remember them for more effective planning next year. It is important to check whether the income matches the one you predicted or not: if not, you have to find out why it happened.

Second, you have to evaluate your actual expenses. See if they differ from your budget, how much do they affect it, why they exceed your expectations (if they do), and so on.

Probably the best thing about reviewing is that it allows you to react to all the unexpected situations quickly, saving your business from the potential troubles and downfalls. So be sure not to skip it.

As you see, writing a business plan is a complex process. You have to be very attentive, to plan everything, starting with your goals and ending with your expenses, to consider so many things and to involve other people in planning if possible. Moreover, you also have to learn all the time, reviewing your plans, making changes, finding the ways to react to unexpected situations.

But while this might look like a tough thing to do, it is very convenient for everyone who wants to manage their business successfully. The planning takes a lot off your shoulders and makes the whole business running process easier. You are able to evaluate the effectiveness of your business by looking at the monthly income increase, at the goals you wanted to achieve, and so on. You are also able to predict the potential downfalls of your business and to use the tools you have to minimize all the risks.

You are able to evaluate the effectiveness of your business by looking at the monthly income increase, at the goals you wanted to achieve, and so on. You are also able to predict the potential downfalls of your business and to use the tools you have to minimize all the risks.

I hope that this guide will help you create strong and realistic budget and business plans, and successfully implement them in running your business. If you have some tips on business and budget planning that you want to share, please do so in the comment section below!

Author’s Bio:

Kevin Nelson started his career as a research analyst and has changed his sphere of activity to writing services and content marketing. Apart from writing, he spends a lot of time reading psychology and management literature searching for the keystones of motivation ideas. Feel free to connect with him on Facebook , Twitter , Google+ , Linkedin .

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

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7 Business Plan Examples to Inspire Your Own (2024)

Need support creating your business plan? Check out these business plan examples for inspiration.

Any aspiring entrepreneur researching how to start a business will likely be advised to write a business plan. But few resources provide business plan examples to really guide you through writing one of your own.

Here are some real-world and illustrative business plan examples to help you craft your business plan .

7 business plan examples: section by section

The business plan examples in this article follow this template:

• Executive summary.  An introductory overview of your business.
• Company description.  A more in-depth and detailed description of your business and why it exists.
• Market analysis.  Research-based information about the industry and your target market.
• Products and services.  What you plan to offer in exchange for money.
• Marketing plan.   The promotional strategy to introduce your business to the world and drive sales.
• Logistics and operations plan.  Everything that happens in the background to make your business function properly.
• Financial plan.  A breakdown of your numbers to show what you need to get started as well as to prove viability of profitability.
• Executive summary

Your  executive summary  is a page that gives a high-level overview of the rest of your business plan. It’s easiest to save this section for last.

In this  free business plan template , the executive summary is four paragraphs and takes a little over half a page:

• Company description

You might repurpose your company description elsewhere, like on your About page, social media profile pages, or other properties that require a boilerplate description of your small business.

Soap brand ORRIS  has a blurb on its About page that could easily be repurposed for the company description section of its business plan.

You can also go more in-depth with your company overview and include the following sections, like in the example for Paw Print Post:

• Business structure.  This section outlines how you  registered your business —as an  LLC , sole proprietorship, corporation, or other  business type . “Paw Print Post will operate as a sole proprietorship run by the owner, Jane Matthews.”
• Nature of the business.  “Paw Print Post sells unique, one-of-a-kind digitally printed cards that are customized with a pet’s unique paw prints.”
• Industry.  “Paw Print Post operates primarily in the pet industry and sells goods that could also be categorized as part of the greeting card industry.”
• Background information.  “Jane Matthews, the founder of Paw Print Post, has a long history in the pet industry and working with animals, and was recently trained as a graphic designer. She’s combining those two loves to capture a niche in the market: unique greeting cards customized with a pet’s paw prints, without needing to resort to the traditional (and messy) options of casting your pet’s prints in plaster or using pet-safe ink to have them stamp their ‘signature.’”
• Business objectives.  “Jane will have Paw Print Post ready to launch at the Big Important Pet Expo in Toronto to get the word out among industry players and consumers alike. After two years in business, Jane aims to drive $150,000 in annual revenue from the sale of Paw Print Post’s signature greeting cards and have expanded into two new product categories.”
• Team.  “Jane Matthews is the sole full-time employee of Paw Print Post but hires contractors as needed to support her workflow and fill gaps in her skill set. Notably, Paw Print Post has a standing contract for five hours a week of virtual assistant support with Virtual Assistants Pro.”

Your  mission statement  may also make an appearance here.  Passionfruit  shares its mission statement on its company website, and it would also work well in its example business plan.

• Market analysis

The market analysis consists of research about supply and demand, your target demographics, industry trends, and the competitive landscape. You might run a SWOT analysis and include that in your business plan. 

Here’s an example  SWOT analysis  for an online tailored-shirt business:

You’ll also want to do a  competitive analysis  as part of the market research component of your business plan. This will tell you who you’re up against and give you ideas on how to differentiate your brand. A broad competitive analysis might include:

• Target customers
• Unique value add  or what sets their products apart
• Sales pitch
• Price points  for products
• Shipping  policy
• Products and services

This section of your business plan describes your offerings—which products and services do you sell to your customers? Here’s an example for Paw Print Post:

• Marketing plan

It’s always a good idea to develop a marketing plan  before you launch your business. Your marketing plan shows how you’ll get the word out about your business, and it’s an essential component of your business plan as well.

The Paw Print Post focuses on four Ps: price, product, promotion, and place. However, you can take a different approach with your marketing plan. Maybe you can pull from your existing  marketing strategy , or maybe you break it down by the different marketing channels. Whatever approach you take, your marketing plan should describe how you intend to promote your business and offerings to potential customers.

• Logistics and operations plan

The Paw Print Post example considered suppliers, production, facilities, equipment, shipping and fulfillment, and inventory.

Financial plan

The financial plan provides a breakdown of sales, revenue, profit, expenses, and other relevant financial metrics related to funding and profiting from your business.

Ecommerce brand  Nature’s Candy’s financial plan  breaks down predicted revenue, expenses, and net profit in graphs.

It then dives deeper into the financials to include:

• Funding needs
• Projected profit-and-loss statement
• Projected balance sheet
• Projected cash-flow statement

You can use this financial plan spreadsheet to build your own financial statements, including income statement, balance sheet, and cash-flow statement.

Types of business plans, and what to include for each

A one-page business plan is meant to be high level and easy to understand at a glance. You’ll want to include all of the sections, but make sure they’re truncated and summarized:

• Executive summary: truncated
• Market analysis: summarized
• Products and services: summarized
• Marketing plan: summarized
• Logistics and operations plan: summarized
• Financials: summarized

A startup business plan is for a new business. Typically, these plans are developed and shared to secure  outside funding . As such, there’s a bigger focus on the financials, as well as on other sections that determine viability of your business idea—market research, for example.

• Market analysis: in-depth
• Financials: in-depth

Your internal business plan is meant to keep your team on the same page and aligned toward the same goal.

A strategic, or growth, business plan is a bigger picture, more-long-term look at your business. As such, the forecasts tend to look further into the future, and growth and revenue goals may be higher. Essentially, you want to use all the sections you would in a normal business plan and build upon each.

• Market analysis: comprehensive outlook
• Products and services: for launch and expansion
• Marketing plan: comprehensive outlook
• Logistics and operations plan: comprehensive outlook
• Financials: comprehensive outlook

Feasibility

Your feasibility business plan is sort of a pre-business plan—many refer to it as simply a feasibility study. This plan essentially lays the groundwork and validates that it’s worth the effort to make a full business plan for your idea. As such, it’s mostly centered around research.

Set yourself up for success as a business owner

Building a good business plan serves as a roadmap you can use for your ecommerce business at launch and as you reach each of your business goals. Business plans create accountability for entrepreneurs and synergy among teams, regardless of your  business model .

Kickstart your ecommerce business and set yourself up for success with an intentional business planning process—and with the sample business plans above to guide your own path.

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Business plan examples FAQ

How do i write a simple business plan, what is the best format to write a business plan, what are the 4 key elements of a business plan.

• Executive summary: A concise overview of the company's mission, goals, target audience, and financial objectives.
• Business description: A description of the company's purpose, operations, products and services, target markets, and competitive landscape.
• Market analysis: An analysis of the industry, market trends, potential customers, and competitors.
• Financial plan: A detailed description of the company's financial forecasts and strategies.

What are the 3 main points of a business plan?

• Concept: Your concept should explain the purpose of your business and provide an overall summary of what you intend to accomplish.
• Contents: Your content should include details about the products and services you provide, your target market, and your competition.
• Cashflow: Your cash flow section should include information about your expected cash inflows and outflows, such as capital investments, operating costs, and revenue projections.

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Business plan vs budget: what's the difference?

Is the difference between business planning and working out the budget confusing you? These two concepts can be tricky to distinguish, which is why we're here to give you a clear definition of both in our business plan vs. budget guide below.

Business plan vs budget: what do they have in common?

There are two main similarities between business planning and budgeting:

• The first one is that they both give an idea as to what the company's future could be.
• The second is that they both include a financial forecast which has been put together by the management team. Data around both the business planning and budgeting exercises are to be presented to potential financial partners, lenders or investors.

Business plan vs budget: what are the differences?

There are three main differences between business planning and budgeting: the scope, the time frame, and the depth.

Business plan vs. budget: The scope

A budget only includes a financial forecast, whereas a business plan will also detail the commercial opportunity and the market, the company and its organisation and strategy over the next few years. The scope of the business plan is therefore much larger than the budget.

Business plan vs. budget:  T he time frame

Both documents have very different time frames. A budget is done over a short-term horizon, generally for 12 months, while a business plan is a medium-long term document looking at the next 3 to 5 years.

Business plan vs. budget:   The depth

The level of depth and detail for each document also varies significantly.

A budget will have to be very detailed, and will include an itemised list of each planned expense with its exact cost, whereas a business plan will leave room for change, as the main goal will be to get a global view of the business.

This can also be explained by the two document's respective time frames.

Apart from new businesses, it is easy for a company to have an idea of what's going to happen in the next 12 months, which makes it easier for the management team to use last year's accounts as a point of reference by simply adding inflation and marketing costs for the new year to create the budget.

It is much harder to have a clear vision of what will happen to a company over the next 3 or 5 years. Market demand can evolve, regulation can change, competitors can adapt to different market trends, and many other aspects of the business can dramatically change the game, rendering it impossible for the entrepreneur to predict exactly how well the company will be able to perform financially.

Before any entrepreneur can truly claim they know what they're doing when putting a business plan or budget together, it's vital to understand the difference between the two. 

We do hope this article has helped you understand the main differences between a business plan and a budget, however do not hesitate to get in touch if you have any more questions.

Also on The Business Plan Shop

• What is a business plan and how can I create one?
• How to do a market analysis for a business plan
• How to create a sales forecast for your business

Know someone who could be interested finding out more about the differences between business planning and budgeting? Share this article with just one click.

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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What We Know About Kamala Harris’s $5 Trillion Tax Plan So Far

The vice president supports the tax increases proposed by the Biden White House, according to her campaign.

• Share full article

By Andrew Duehren

Reporting from Washington

In a campaign otherwise light on policy specifics, Vice President Kamala Harris this week quietly rolled out her most detailed, far-ranging proposal yet: nearly $5 trillion in tax increases over a decade.

That’s how much more revenue the federal government would raise if it adopted a number of tax increases that President Biden proposed in the spring . Ms. Harris’s campaign said this week that she supported those tax hikes, which were thoroughly laid out in the most recent federal budget plan prepared by the Biden administration.

No one making less than $400,000 a year would see their taxes go up under the plan. Instead, Ms. Harris is seeking to significantly raise taxes on the wealthiest Americans and large corporations. Congress has previously rejected many of these tax ideas, even when Democrats controlled both chambers.

While tax policy is right now a subplot in a turbulent presidential campaign, it will be a primary policy issue in Washington next year. The next president will have to work with Congress to address the tax cuts Donald J. Trump signed into law in 2017. Many of those tax cuts expire after 2025, meaning millions of Americans will see their taxes go up if lawmakers don’t reach a deal next year.

Here’s an overview of what we now know — and still don’t know — about the Democratic nominee’s views on taxes.

Higher taxes on corporations

The most recent White House budget includes several proposals that would raise taxes on large corporations . Chief among them is raising the corporate tax rate to 28 percent from 21 percent, a step that the Treasury Department estimated could bring in $1.3 trillion in revenue over the next 10 years.

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Mayor-President Sharon Weston Broome speaks in a press conference Friday afternoon in response to the Louisiana Supreme Court’s ruling in favor of the controversial proposed City of St. George at City Hall on April 26, 2024.

• Javier Gallegos
• Copy article link

District Attorney Hillar Moore speaks during a press conference regarding a drug bust at Baton Rouge Police Department Headquarters on Thursday, August 15, 2024.

What does St. George mean for Baton Rouge's budget? The city is starting to plan for cuts.

Patrick Sloan-Turner

• Author email
• Aug 25, 2024
• 5 min to read

Baton Rouge government agencies have been told to submit plans for budget cuts of 10% and 20%, highlighting the uncertainty surrounding the city-parish's finances caused by the incorporation of the new city of St. George.

It is still uncertain if the cuts will happen. But if they do, the reductions could reverberate throughout some of the parish's most consequential agencies, officials say.

St. George is set to take over a big portion of the sales taxes that go into the city-parish's general fund. Departments that get money from that fund were asked to submit a plan with 10% cuts and another with 20% cuts.

Those agencies include:

• Police Department 
• Fire Department
• Maintenance
• Transportation and Drainage
• Buildings and Grounds
• Development
• Finance Department
• City Court 
• Sheriff's Office
• Parish Attorney
• District Court
• Risk Management
• District Attorney
• Information Services

On Friday, East Baton Rouge Mayor-President Sharon Weston Broome said the reduction requests given to departments in June were both a response to the stabilization of sales and use taxes as well as the pending rehearing at the time regarding the Louisiana Supreme Court's decision regarding St. George.

The East Baton Rouge Metro Council will vote on a 2025 budget in December, which could include some of the cuts the city-parish has asked departments to submit.

District 3 Metro Council member Rowdy Gaudet said he has had meetings with the city's finance director and the Mayor's Office on the impact of St. George's incorporation on the city's budget. But it is tough for East Baton Rouge officials to understand the degree of that impact, he said, as the details of St. George's financial makeup remain unclear.

"Because St George is still not an exact target in terms of, there's still some unanswered questions, we don't have those exact numbers," Gaudet said.

Gaudet said he and others will need to be precise when they amend and adopt a budget for 2025 in coming months, but said as he understands it, the financial bottom line for St. George is still being discussed between the city-parish and the new city's leadership.

"I would say, based on what's been told to me, a number for this coming year is still something that's being negotiated among the parties," he said.

A letter sent by Broome on Aug. 13 highlighted divisions between the city-parish and St. George over the new city's budget. 

The same day, the St. George City Council passed a budget estimating $28 million in tax revenue through the remainder of 2024, though it has not yet received these funds.

St. George is set to make up some of this lost revenue for the city-parish via an intergovernmental agreement for services provided for the city, but its leaders have yet to inform the Mayor's Office what those services will be and have only estimated $8 million for such for an eight-month period in their 2024 budget, Broome said.

The $28 million in tax revenue St. George budgeted from the end April 2024 through the start of 2025 equates to about $43 million annually. This would represent lost funds from the city-parish's general fund — which had a total of $413 million budgeted for 2024 — if St. George is able to implement its 2% sales tax next year.

As of Friday, Broome said her office is still waiting for a response from St. George regarding the Aug. 13 letter. The city-parish still does not know what services St. George wants the city-parish to continue to provide throughout 2025. 

"We do not have the information we have repeatedly requested from the City of St. George, including answers to the basic question of what essential governmental services the City of St. George wants to provide its residents," the mayor said.

During the current transition period of unknowns regarding St. George, Broome said a portion of sales and use tax collected by the parish and in use could potentially be remitted to St. George and may require adjustments to the general fund.

'We're constantly in crisis'

Like others, District Attorney Hillar Moore was asked to submit 10% and 20% reduced budgets for next year. If cuts resemble those figures, it could decimate the DA's operations, Moore said, as its general fund expenses are entirely made up of staff salaries.

"I can tell you that right now we are, we are drowning in cases," Moore said. "Folks here, they're struggling to keep up with what they have. And you know, the salary is really kind of disappointed in the inability to give them raises for their valued work."

The DA said his office — which represents the most populated parish in Louisiana — already combats retention issues, as many assistant district attorneys in the parish start at a salary of around $60,000 fresh out of law school with $200,000 to $300,000 worth of student debt.

"A 10 to 20% reduction would translate at least 10 to 20% reduction in our workforce," said Jon Daily, CPA for the District Attorney's Office. "That's anywhere from 15 to 30 people that we could lose, which obviously would be threatening to public safety, and we're already understaffed compared to our peers."

Moore said the DA's Office has no political qualms with St. George and fully trusts the new city will make up some of the cuts that could come to his department. But like others, the fear lies in submitting a reduced budget while not knowing how much will be made up, as little appears to be worked out between St. George and the city-parish regarding finances, meaning they don't know what the makeup of the office's staff will look like in January.

"It's hard to say right now, because there's an active dispute about the finances," Daily said. "We're constantly in crisis management with our budget right now. And our budget dictates what we can and cannot do, yet we have constitutional obligations to carry out." 

Moore's office — which employs around 65 attorneys — is given cases by the local police department and East Baton Rouge Sheriff's Department, which also are operating understaffed.

"Think if the police department and the sheriff were fully staffed. We would not be just taken on water. We would be sinking and imploding," Moore said.

EBRSO: reduced budget for prison can't happen

Among the departments asked to submit reduced budgets was the Sheriff's Office, whose largest chunk of general fund expenses is the East Baton Rouge Parish Prison. 

In response to the request, the Sheriff's Office told the city-parish's finance department that any sort of reduction would be "impractical and unobtainable" for the facility.

In an email sent to a finance department on Aug. 9, Amanda Oliveaux, Finance and Budget Coordinator for the East Baton Rouge Sheriff's Office, said items in the prison's budget are of statute, leaving virtually no legal wiggle room for reduction.

"The only budget variable left would be for building materials, repairs and maintenance, which is still a statutory obligation and unrealistic to adjust considering the physical conditions of the building and its property," Oliveaux wrote.

The Sheriff's Office has often noted the poor conditions of the parish prison, including in April, when Sheriff Sid Gautreaux told Broome the facility was not suitable to house 17-year-old inmates as ordered under a new law, and the teens would have to be sent elsewhere.

Oliveaux said submitting a reduced budget with no regard for repairs and maintenance would be a false representation of the prison's ongoing financial needs.

Broome: 'I will do everything possible to avoid layoffs'

There are less than 75 days between now and when Broome will propose her final budget to Metro Council for 2025 with many unsettled variables that will hopefully be determined before then, she said.

Still, through proactive planning for what may come, Broome has directed all departments to hire only critical personnel right now. 

"I will do everything possible to avoid layoffs during this transition period and have directed City-Parish Finance and department heads in preparing the 2025 budget to proceed under that approach," she said.

The mayor said it is her "sincere hope" that by the time a budget is proposed and approved by Metro Council in December, all the legal determinations necessary will be completed and an intergovernmental agreement between St. George and the city-parish will have been made. 

And while she still has not received a response from leadership of the new city, she hopes one comes soon.

"I stand ready to work with leaders of St. George to negotiate a timely agreement, but again, we await requested responses from the City of St. George that are critical to finalizing specific budgets both for the City-Parish of East Baton Rouge and the City of St. George," Broome said.

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Creating an Effective Project Budget Plan: A Comprehensive Guide

• Updated on August 19, 2024

Project managers often find themselves caught in a paradox: the budget is simultaneously the most crucial and the most elusive aspect of project planning . While we’re taught to meticulously craft Gantt charts and risk registers, the art of budget planning often remains shrouded in mystery, relegated to finance departments, or treated as a necessary evil.

But here’s a truth seldom discussed in project management circles, your budget isn’t just a financial document—it’s a strategic roadmap that can make or break your project’s success. Imagine a budget that doesn’t just constrain but empowers—a living document that evolves with your project, anticipates challenges, and unlocks opportunities.

In this guide, we’ll delve deep into the art and science of creating a project budget plan that goes beyond basic arithmetic. We’ll explore how to craft a budget that not only accounts for costs but also aligns with your project’s strategic goals, adapts to changing circumstances, and provides actionable insights throughout the project lifecycle.

Whether you’re managing a traditional waterfall project or navigating the complexities of an agile environment, mastering the nuances of budget planning will elevate your project management skills to new heights. 

Understanding Project Budget Plans

A project budget is not just a ledger of costs and revenues; it’s a strategic tool that aligns your financial resources with project goals. It guides project execution, facilitates stakeholder communication, measures performance, and manages risks. However, many project managers treat the budget as a static document, failing to adapt it to changing circumstances. A truly effective budget plan should be as agile as the project itself, evolving while maintaining fiscal discipline.

A comprehensive project budget includes direct costs like labor, materials, and subcontractor fees, along with indirect costs such as overhead and compliance fees. Contingency reserves, cash flow projections, and a cost baseline are also essential components. Often overlooked are opportunity costs and value-added metrics, which are increasingly important as projects are expected to deliver strategic value, not just stay within budget.

Creating an Effective Project Budget Plan

Building a comprehensive project budget is a critical yet challenging aspect of project management. There are many essential components to include, such as direct and indirect costs, fixed and variable costs, labor and materials, travel, equipment and space, licenses, and any other factors that may impact project expenses.

To create an effective project budget plan, a multifaceted approach is required. Before diving into the numbers, it’s crucial to define the project’s scope and objectives clearly. This involves conducting a value stream mapping exercise, performing a stakeholder value analysis, and implementing a scope-to-budget matrix to ensure alignment between the budget and the project’s strategic goals.

Next, identifying all potential costs is key to creating a comprehensive budget. Utilizing AI-powered cost prediction tools, holding cross-functional cost identification workshops, and developing a cost risk register can help uncover hidden or non-obvious expenses. Accurately estimating resource requirements, through methods like parametric modeling and skills-based resource allocation, is also essential.

Leveraging historical data and lessons learned from past projects can provide a valuable starting point for building the budget. Tapping into the expertise of mentors, project managers, and subject matter experts can also help project teams stay on track and avoid common pitfalls. Proactively managing risks and contingencies is another crucial step. By implementing Monte Carlo simulations, a tiered contingency system, and a risk-adjusted budget, project managers can take a more strategic approach to budget planning and control.

Finally, establishing a dynamic timeline, using techniques like rolling wave planning and milestone-based budget gates, can help maintain budget flexibility and visibility throughout the project lifecycle. Integrating real-time budget tracking and reporting capabilities can further enhance the project team’s ability to monitor and control the budget effectively.

Best Methods for Project Budget Estimation

Estimation is where art meets science in project budgeting. Let’s explore some advanced techniques that go beyond traditional approaches.

1. Top-Down Budgeting

Top-down budgeting starts with an overall budget figure and breaks it down into components. This approach allows project managers to leverage machine learning algorithms to refine historical comparisons through analogous estimation. Additionally, implementing a strategic allocation model can help distribute the budget based on organizational priorities. To further enhance this method, project managers can develop a cascading budget framework that enables autonomous team-level budgeting within the overall constraints.

2. Bottom-Up Budgeting

In contrast to the top-down approach, bottom-up budgeting builds the budget from individual components. This method utilizes activity-based costing to accurately assign costs to specific project activities. By implementing a collaborative estimation platform, project teams can input and justify their budget needs, ensuring transparency and buy-in. To account for uncertainties in individual cost components, project managers can employ stochastic estimation techniques.

3. Parametric Estimating

Parametric estimating uses statistical relationships between historical data and variables to generate budget projections. This technique requires project managers to develop custom parametric models tailored to their organization’s unique project characteristics. By implementing machine learning algorithms, these models can be continuously refined and improved to enhance the accuracy of the estimates. To make this process more efficient, project managers can create a parametric estimation dashboard in NimbleWork, a platform that provides quick, data-driven budget projections.

4. Three-Point Estimating 

Three-point estimating considers optimistic, pessimistic, and most likely scenarios to provide a more comprehensive budget projection. This approach enhances the traditional PERT (Program Evaluation and Review Technique) estimates by incorporating risk-weighted scenarios. Additionally, by using Monte Carlo simulations, project managers can generate probability distributions for budget outcomes, enabling them to make informed decisions. To ensure the model remains dynamic, project managers should implement a three-point estimation model that updates in real time as project conditions change.

Common Pitfalls in Project Budget Planning

Even the most experienced project managers can fall prey to budget planning pitfalls. By understanding these common mistakes, you can fortify your budgeting process and ensure more accurate, effective financial management. 

1. Underestimating Scope Creep 

Scope creep is a silent budget killer, often lurking beneath the surface of seemingly innocuous change requests. The pitfall lies in failing to account for the cumulative impact of minor scope changes. To avoid this, implement a change impact analysis tool that automatically calculates the budgetary effect of each scope modification. Additionally, create a ‘scope bank’ where additions to scope must be balanced by reductions elsewhere.

2. Neglecting Hidden Costs

Many budgets fall short because they focus solely on obvious, direct costs while overlooking less apparent expenses. Ignoring costs like team training, software licenses, or compliance requirements. Develop a comprehensive cost checklist that includes often-forgotten items and utilize AI-powered cost discovery tools to identify potential hidden expenses based on project characteristics.

3. Overreliance on Historical Data

While historical data is valuable, relying too heavily on past figures can lead to inaccurate estimates, especially in a rapidly changing business environment. Applying outdated cost structures to new projects without considering technological or market changes is a common mistake. Instead, implement a ‘future-proofing factor’ in your estimation process that accounts for anticipated changes. Utilize trend analysis and predictive modeling to adjust historical data for current and future projects.

4. Inadequate Risk Quantification

Generic contingencies often fail to address specific risks. Instead, create a risk-adjusted budget model that links particular risks to corresponding budget items. Developing a risk-adjusted budget model that ties specific risks to budget line items and using probabilistic budgeting can provide a more realistic range of budget scenarios based on potential risk events. 

5. Ignoring the Time Value of Money 

For longer projects, failing to account for inflation, currency fluctuations, or opportunity costs can distort budget accuracy. Creating static budgets that don’t consider these financial changes over time is a significant pitfall. To address this, implement a time-phased budgeting approach that factors in projected financial changes. Utilizing Net Present Value (NPV) calculations for budget items can also account for the time value of money, ensuring a more accurate financial plan.

6. Siloed Budgeting Process 

Creating a budget in isolation from other project processes and stakeholders can lead to misalignment and unrealistic expectations. Developing the budget without input from key team members or stakeholders can lead to confusion and chaos. Using a collaborative budgeting platform where team members can contribute insights and estimates, and implement regular budget review sessions that align financial planning with project strategy and stakeholder expectations are crucial for maintaining budget integrity.

Monitoring and Controlling the Project Budget

Creating a budget is just the beginning; the real challenge lies in effectively monitoring and controlling it throughout the project lifecycle. Real-time budget tracking, predictive analytics, and rolling wave budgeting are essential tools for maintaining control, replacing the outdated approach of monthly reports. 

☑ Real-Time Budget Tracking : Utilize dashboards for instant visibility and set up automated alerts for variances. This proactive approach helps address issues before they escalate.

☑ Predictive Analytics : Anticipate budget issues by analyzing spending patterns and project progress. Predictive models simulate the impact of decisions on the budget, enabling informed choices.

☑ Value-Driven Budgeting : Focus on the value delivered rather than just the cost. Develop a system to track value realization and use metrics to ensure that spending is justified by the value created.

☑ Proactive Budget Reviews : Schedule regular budget health checks to analyze trends and address issues. A budget health scorecard can assess financial performance and control.

Project budget planning has evolved into a crucial strategic element in project management, beyond just cost estimation and tracking. It’s now about crafting a flexible financial framework that aligns with project goals, anticipates risks, and drives value.

The techniques and strategies we’ve covered, from AI-powered cost prediction to value-based budget control, represent the forefront of project financial management. By adopting these methods, project managers can turn budgets from mere constraints into opportunities for success.

To fully harness these advanced budgeting techniques, the right tools are essential. This is where Nimble excels, offering real-time budget dashboards, AI-driven forecasting, integrated time and expense tracking, customizable workflows, and collaborative platforms—all designed to make complex financial data accessible and actionable.  Remember, effective budget planning is both an art and a science, and with the right tools and mindset, your project budgets can become powerful assets for achieving success and delivering exceptional value. Sign up for a  Free trial of Nimble.

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Financial experts reveal how Americans can prepare for the possibility of a recession

Reviewing expenses, creating a budget and having a contingency plan are advised.

We need more incentives for housing production: Jim Tobin

National Association of Home Builders CEO Jim Tobin discusses Vice President Kamala Harris pushing a tax incentive to build homes on ‘Maria Bartiromo’s Wall Street.’

Financial experts are revealing how Americans can prepare for the possibility of a recession with concerns about the economy.

Federal Reserve Chair Jerome Powell on Friday indicated that interest rate cuts could come soon, telling Kansas City Fed's symposium in Jackson Hole, Wyo., "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks." 

Chris Markowski, of Markowski Investments, told Fox News Digital that Americans should not buy into the hype or "fear" of recessions. Instead, they should look at it as a "housecleaning" opportunity where they can make necessary cutbacks and come out stronger than before. 

"I think many Americans right now feel that they're in a recession already," Markowski said. "Their buying power has been, in essence — it's gone away, based upon inflation and money and what it can buy them, what they're paying for groceries or what they're paying for cars and what they're paying for the bare necessities of life." 

US PRODUCER PRICES RISE LESS THAN EXPECTED IN JULY  

 In this photo illustration, one and five dollar bills seen on display.  (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Imagehoto Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images) / Getty Images)

Markowski advised investors not to panic when it comes to their portfolios and avoid attempting to time the market. When Americans hit slow times, they can cut back on what they do not need and come out stronger due to their new efficiencies. 

David Peters, from Peters Tax Preparation & Consulting PC, said Americans must look at their spending to prepare for a potential recession , must not stop saving for retirement, and try not to take out large loans. 

"Where is your money going?" he asked. "Are there places where you need to tighten your belt? You should take a look at your budget and figure out how to still make room in it for savings — even in the midst of rising costs. Make sure that you have an emergency account that is funded (three months of expenses is ideal)." 

"As I have told many clients, the most important thing is to have perspective," Peters added. "We have been through economic ups and downs in the past (and a pandemic most recently). We just need to cut spending where we can and continue to save. These hard times will pass too." 

Al Lord, of Lexerd Capital Management, encouraged Americans "looking to buy a home or continue renting" to "prioritize maintaining stable employment and ensure that housing costs stay below 30% of their monthly income." 

"It's important to review expenses, create a realistic budget, and have a contingency plan in place in case job security becomes uncertain," he said. 

Andrew Van Alstyne, from Fiduciary Financial Advisors, told Fox News Digital that ideally Americans would want to increase their liquidity amid the uncertainty. 

Priceline CEO: I wouldn’t call it a slowdown, but there is a 'softness' in consumer spending

Priceline CEO Brett Keller breaks down leisure spending in the United States on 'The Claman Countdown.'

"That means ensuring you're able to cover anywhere from six to 12 months of expenses without changing your lifestyle," Van Alstyne said. "The first source of funds should be in an emergency fund sitting savings account (usually three to six months of expenses). The next source of funds would be in a brokerage account (non-retirement investment account) and would draw down on cash, then investments that are easily traded (liquid). Do not take loans or cash-out retirement accounts unless it's RMDs or a previously established withdrawal strategy in retirement. Lastly, cut back (not necessarily eliminate) unnecessary expenses until the economy balances out and we know what best next steps are." 

Self-made multi-millionaire John Cerasani, who built his company during a recession, told Fox News Digital that "there are opportunities for entrepreneurs to emerge in recession-proof industries." 

"Focusing on services related to higher education institutions is an example of an industry that typically thrives during a recession," he explained.  

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Guild Investment Management’s Tony Danaher advised Americans to "hold off on high-ticket purchases, lock down and extend employment contracts (or make yourself invaluable) and save."  

"Consider less market and economic sensitive investments," Danaher added. "If needed, put off retiring if worried about income ."