Starting and running a business is exciting, but let’s be honest, managing money can feel overwhelming. Don’t worry, though – you don’t need to be a financial whizz to get your business budget right. Let’s break it down into simple steps that anyone can follow.

If you feel you want to speak to a friendly professional who can make things simple for you face-to-face, we are right here. Call us on 020 8468 1087 or email our team at today.

Starting a business? We simplify budgeting while helping boost growth and cut costs. Tailored advice, clear insights, and no jargon - let’s make your startup thrive!

Why Budgeting Matters For Your Business

Imagine driving a car without a fuel gauge. You’d constantly worry about running out of petrol, right? That’s what running a business without a budget feels like.

A budget:

  • Shows you how much money is coming in and going out.
  • Helps you set clear financial goals, like saving for growth or preparing for unexpected costs.
  • Keeps you on track to avoid overspending or cash flow problems.

Without a budget, you might make decisions based on guesses rather than facts. And in business, guessing isn’t a safe strategy.

Step-By-Step Guide To Small Business Budgeting

1. Know Your Income

Start by listing all the money your business earns. If you sell products or services, this includes sales revenue. Be realistic and use figures from past months, or estimate conservatively if you’re just starting out.

Example: If your shop earns £5,000 monthly on average, that’s your starting point.

2. Track Your Expenses

Next, write down every outgoing cost. Divide them into two categories:

  • Fixed costs: These stay the same each month, like rent, insurance, or salaries.
  • Variable costs: These change, like stock purchases, utility bills, or marketing.

Example:

  • Rent: £1,200/month
  • Utilities: £200/month (average)
  • Stock: £1,500/month

3. Plan For Growth

If you want your business to grow, allocate part of your budget for reinvestment. This could be for marketing, hiring staff, or upgrading equipment. For example, if you make £5,000 monthly and spend £3,900 on expenses, save £1,000 for future growth.

4. Save For Taxes And Emergencies

Along with covering everyday costs and planning for growth, you must also set aside funds for:

  • Tax bills: Save at least 20% of your income for personal tax and VAT (if applicable). Consider setting up a separate savings account for these.
  • Emergencies: Build a cushion for unexpected expenses or quiet months. Aim for 10% of your income.

Digital banks like Monzo or Starling Bank will help you create dedicated pots for taxes, emergencies, or other financial goals.

5. Review Regularly

Your budget isn’t a one-time task. Review it monthly to see what’s working and what isn’t. Adjust as needed to stay on track.

Common Startup Budgeting Mistakes To Avoid

1. Guessing Your Numbers

Relying on rough estimates instead of real data can throw off your entire budget. Always use accurate records, like invoices or bank statements, to track income and expenses for a clear financial picture.

2. Forgetting Small Costs

Overlooking minor expenses, like subscription services or office supplies, can lead to budgeting gaps. These small costs add up over time and can drain resources if left untracked.

3. Not Tracking Cash Flow

Ignoring when money comes in versus when it goes out can cause cash shortages. Even a profitable business can struggle to pay bills if income doesn’t align with outgoing payments.

What Should You Do Next?

  • Start simple: Begin by listing all your income and expenses. Focus on being honest and accurate with your numbers.
  • Use tools: Consider using budgeting apps like Xero. It simplifies expense tracking and helps you create a clear financial picture. Plus, working with us (platinum partners with Xero), you get discounted rates for the software. For more information, check out our resources page.
  • Get expert help: If budgeting feels overwhelming, reach out to an accountant who can help with startup budgeting strategies. They’ll offer tailored advice and spot opportunities to save money. An expert can also ensure you’re staying compliant with tax laws.

Contact Bells Accountants

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Rely On Us For Budgeting – Let’s Ensure Your Business Growth!

Budgeting is the backbone of any successful business. It provides clarity, helps you plan for growth, and prepares you for the unexpected. Whether you’re just starting or looking to grow, take the first step today.

Our team at Bells Accountants is here to guide you every step of the way. We work with you like a friend who understands business finances and explains everything to you as simply as possible.

Here’s how we can make your startup budgeting and accounting simple and effective in the UK:

  • Tailored advice: Whether you want detailed insights or just a quick overview, we’ll explain everything in plain English.
  • Transparent pricing: No hidden costs, no hourly rates – just clear, fair prices.
  • Proactive support: We’ll help you avoid fines, improve cash flow, and manage your budget effectively.

Let’s work towards your business goals together. Get in touch today for personalised financial advice.