{"id":270628,"date":"2024-07-08T15:48:23","date_gmt":"2024-07-08T03:48:23","guid":{"rendered":"https:\/\/www.reckon.com\/au\/?post_type=sbh&p=270628"},"modified":"2024-07-08T15:48:23","modified_gmt":"2024-07-08T03:48:23","slug":"budgeting-and-forecasting-for-small-businesses","status":"publish","type":"sbh","link":"https:\/\/www.reckon.com\/au\/small-business-resources\/starting-a-small-business\/budgeting-and-forecasting-for-small-businesses\/","title":{"rendered":"Budgeting and forecasting for small businesses"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.23″ custom_padding_tablet=”” custom_padding_phone=”0px||||false|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.23″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_padding=”||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Copy paste body text here” _builder_version=”4.23.1″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n

Budgeting and forecasting for small businesses sits at the very heart of profitability and success.<\/span><\/p>\n

If forecasting and budgeting for small businesses is inadequate, the ability to turn a profit, grow a business, get finance and endure into the future could be severely compromised.<\/span><\/p>\n

This is one of the most vital aspects of succeeding as a small business. Luckily, budgeting and forecasting is easily taught and implemented with either small business accounting<\/a> software or basic accounting techniques.\u00a0<\/span><\/p>\n

With a little know-how and discipline, budgeting and forecasting for your small business is easily within your grasp.<\/span><\/p>\n

What is a budget and how does budgeting work?<\/span><\/h2>\n

\"Budget<\/p>\n

Getting back to basics, let\u2019s take a few seconds to remind ourselves: what is budgeting and how does budgeting work?<\/span><\/p>\n

So, what is a business budget? A budget is simply a plan for income and expenses<\/b>.<\/span><\/p>\n

In its most basic form, a budget consists of:<\/span><\/p>\n

Timeline:<\/span>\u00a0<\/span><\/h3>\n

Define the period of your business budget. Many small businesses will budget quarterly, half yearly or yearly.<\/span><\/p>\n

Income:\u00a0<\/span><\/h3>\n

Map out your expected income for the period. It\u2019s prudent to underestimate your income to avoid financially painful errors which can result in a cashflow shortfall.<\/span><\/p>\n

Fixed expenses:\u00a0<\/span><\/h3>\n

A fixed expense is an expense which is stable, reliable, and unlikely or impossible to change. For example, your own salary, rent, internet and insurance are fixed expenses.<\/span><\/p>\n

Variable expenses: <\/span>
<\/span>A variable expense is a cost which fluctuates and is less predictable. For example, rates, staff wages and stock purchases. As this is the most volatile aspect of your budget, do what you can to make variable expenses fixed (through fixed term contracts, for example).\u00a0<\/span><\/p>\n

Make sure to overestimate variable expenses to reduce budget shock.<\/span><\/p>\n

Why is budgeting so important?<\/span><\/h2>\n

At the bare minimum, budgeting controls your spending, keeps a record of your expenses and maps the health of your cashflow and savings.<\/span><\/p>\n

Just as important, a budget helps you:<\/span><\/p>\n