Budgeting for Small UK Businesses - NMK

Running a small business in the UK is no easy task. With high food and energy costs, the ever-increasing costs of renting and employing staff, and the cost of running marketing campaigns, the financial health of your business is far from guaranteed. Hence why small businesses need to have a financial plan that works for them to mitigate surprising circumstances. This will ensure that you have the funds available to cover all of your costs and that you can make a profit.

Here are some basic tips that may help you keep your books in order.

What is a budget?

A budget is a financial plan of future revenue and expenditure. It helps you spend your money in a planned way. For example, your budget for this month may include £1500 for revenue, £600 for rent, £200 for advertisement, and £300 for accountancy fees, with the money left over for savings. By having a budget, you can make sure that you have enough money to cover your future expenses and also keep track of your spending to ensure that you are not spending more than you can afford.

A budget is a plan for your money. It’s a plan for making sure that you are spending your money wisely and saving enough for the future.

Is it important to have a budget?

Having a budget is important because it allows you to set aside money for important future expenses, and also track your spending to ensure that you are not overspending. Having a budget is important because it allows you to set aside money for important future expenses, and also track your spending to ensure that you are not overspending. This way, you can make sure that you are always prepared for whatever may come up, lowering the risk of failures commonly faced by small and start-up businesses.

Keeping track of spending

When it comes to keeping track of spending, it can be achieved through several ways.

1. Use budgeting software such as Google's Mint, QuickBooks, or Xero.

Mint is an app that pulls all of your accounts into one place. It scans for transactions, categorizes them, and provides budget breakdowns. Similarly, QB and Xero have features to track budget and actual business transactions.

2. Even though sticking to a strict budget is important, they are instances that may give rise to budget variances. Don’t feel pressured to not spend money just because you haven’t made a budget for it if it is necessary for business. If you spend a little bit more money than you planned, no big deal. It’s a learning experience.

3. A budget sheet is an easy way to keep track of how much money you have and what you have spent on everything, such as rent, food, and clothing. Microsoft Excel provides some free basic budget templates that can be used in small businesses.

How to prepare a budget and what is included?

Many people think that budgeting is a complicated task that takes a lot of time. While it’s true that budgeting isn’t the simplest task, it’s well worth the effort. When you create a budget, you can learn so much about your financial situation. It can also help you meet your business goals.

Follow these simple steps below for a profit and loss budget;

1. Forecast revenue for 12 months, extend to 2 or 3 years as desired.

2. Workout the cost of sales ie. how much it will cost to sell or carry out a particular product/service.

3. Workout monthly fixed costs such as rent, business rates.

4. Workout monthly overhead costs, such as advertisement, accountancy fees, salaries, etc also consider taxes.

5. The net profit or loss enables you to implement business strategies for a successful business

Can my business thrive without a budget?

A budget is one of the many measures for growth and success. Budgets help keep you on track toward achieving your business goals. A budget isn’t necessarily about cutting costs. It’s about making smart financial choices that will lead to a successful business. If your business does not have all these, you miss vital business information which could impede business growth and possibly increase the risk of business failure.

In summary, a budget is a generally planned way of spending and saving. A budget can help you keep track of how much money your business makes and spend, and it can help you plan for the financial future. A budget can also help you to understand how money is being spent, and to save money on unnecessary items.

Look out for our free excel budget template to help you maintain a budget for your business.