How to Create Your Small Business Budget

How to Create Your Budget

Many business owners struggle with creating (and sticking to) a budget more than anything else in their business.

Tell me if this sounds familiar…

“How do you manage your budget?”
“I look at my bank account to see if there is money in there when I want to buy something…”

Your Small Business Budget

Let’s be purposeful and practical in how we manage our dollar, and understand that not every cent of every dollar is yours to spend. Here’s the approach you should take:

• When you are creating a budget, YOU SHOULD BUDGET FOR PROFIT. What? Pay your business first! take a % (5% – 20%) of the revenue dollar and store it far away from you as a “cash profit” for your business. CASH is the lifeblood of any business, and if it doesn’t have it coursing through its veins, it DIES.
  • This money is not touched… and can only be used in cases say….when a pandemic hits
• Pay Yourself! Take another % (5% – 50%) of revenue and make sure you are setting money aside for your own lifestyle. So many business owners forget to pay themselves! don’t do that
• Pay the government... take another % (10% – 15%) and stick this money far far away so you can’t ever see it to make sure the IRS doesn’t come knocking… and you’re not scrambling to find the cash to pay them when tax time rolls around… don’t tell me you’ve never been there…
  • if you have money left over here, give out bonuses or do something fun with your team!
• The REST (30% – 60%) is used for operating expenses. THIS is where you create your business budget from.
  • pro-tip: use percentages instead of dollar amounts so you never really spend more/less than you should. EXAMPLE:
    • Marketing & Advertising = 5% of OpEx /month instead of
    • Marketing & Advertising = $500/month

Review your cash flow at least once per week!

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