Starting a business is like igniting a spark—full of energy, potential, and excitement. But to keep that spark glowing, you need a solid financial foundation. Budgeting isn’t just about numbers; it’s about giving your business the clarity and confidence to shine. The good news? You don’t need to be a finance guru to make it work. Let’s break it down into simple steps.
Why Budgeting is the Light That Guides Your Business
Imagine walking through a dark room without a torch —you’d stumble and struggle to find your way. That’s what running a business without a budget feels like! A budget is your financial beacon, helping you:
Set clear financial goals, like saving for growth or preparing for unexpected expenses.
Avoid overspending and maintain a healthy cash flow.
Track income and expenses so you know exactly where your money is going.
Without a budget, decisions become guesswork—and in business, that’s a risky gamble.
Step-by-Step Guide to Small Business Budgeting
- Know Your Income
To build a strong financial foundation, start by identifying all sources of income. If you sell products or services, this includes sales revenue. Use past figures where possible or estimate conservatively if you’re just starting out.
Example: If your digital marketing agency earns an average of £8,000 per month, that’s your baseline income.
- Track Your Expenses
Next, list every outgoing cost and categorise them:
Fixed costs: These stay the same each month, such as rent, insurance, or salaries.
Variable costs: These fluctuate, like advertising, inventory, or utility bills.
Example:
Software Subscriptions: £250/month
Marketing: £500/month
Office Rent: £1,500/month
- Fuel Growth with Smart Planning
If you want your business to shine even brighter, allocate part of your budget for reinvestment. Whether it’s for branding, hiring, or upgrading equipment, planning ahead ensures sustainable success.
Example: If your business earns £8,000 per month and spends £5,500 on expenses, setting aside £1,500 for future investments can help accelerate growth.
- Save for Taxes and Emergencies
One of the biggest pitfalls for start-ups is not preparing for taxes and unexpected expenses. Stay ahead by:
Saving at least 20% of your income for tax obligations (personal tax, VAT, etc.).
Building an emergency fund—aim to set aside 10% of your income to cover unexpected costs or slower months.
Top Tip: Digital banks like Monzo and Starling Bank allow you to create separate “pots” to manage these savings effortlessly.
- Keep Your Budget Glowing with Regular Reviews
A budget isn’t a one-time task—it’s a living document. Review it monthly to track progress and adjust as needed. This keeps your business financially healthy and prepared for any hurdles ahead.
Common Start-up Budgeting Mistakes to Avoid
Relying on Guesswork: Estimating income and expenses without real data can lead to financial mismanagement. Use bank statements and invoices to ensure accuracy.
Ignoring Small Costs: Seemingly minor expenses like software fees, office supplies, or travel costs can add up over time and disrupt your budget.
Overlooking Cash Flow Timing: Even if your business is profitable on paper, cash flow misalignment—when payments come in after bills are due—can create financial strain.
What’s Your Next Step?
Start small: Write down all income and expenses with accuracy and honesty.
Use technology: Software like Xero can make tracking finances simple and efficient.
Consult an expert: If budgeting feels overwhelming, let an accountant, like Glow Accounts provide tailored strategies to save money and ensure compliance.
Let’s Brighten Your Finances Together!
At Glow Accounts, we believe that financial clarity brings confidence and success. If you’d like a friendly expert to guide you through budgeting, we’re here to help.
Starting a business? Let’s make your finances shine! We simplify budgeting, cut costs, and help your business glow with success.
For a free, no obligation consultation or business health check, contact us today at info@glowaccounts.co.uk or call 01892 267 750 to learn more.
