Business Budget Examples to Skyrocket Your Company

Your business budget is one of the most important parts of any business. It should be accurate and include everything that you have as an expense so that you can make the most money possible and not waste anything unnecessarily. Business Budget Example Breakdown:

This blog post will include business budget example(s) as well as everything you need to create the perfect business budget.

1. Your Business Needs a Budget

Why does your business need a budget? This might seem super obvious because you need to know how much to spend to make a certain amount of revenue. Or so that you don’t spend more than you are making, which are all valid points. But youre business needs a budget so that you and your team can be in alignment with your goals.

Here’s a practical business budget example: You compile your budget and realize that your operating expenses are $100k. Now, you know that if you want to make $50k and pay bonuses on your team of $20k, you need to set a target of $204,000.

After you have your budget and how much you want to make as an owner, you put a little cushion in there in case they don’t hit the goal and set a target for everyone to achieve. Once you have done this, you can work the math backwards to how much you need to sell daily, weekly, and monthly to hit this goal and manage off of targets.

Without a business budget, you are operating your business off of guessing. And I don’t know about you, but I don’t like to guess how much money I am going to make off of luck. I like to have a plan and stick to it because I know that I can make it work.

This strategy not only gives you confidence, but unites you and your team toward a common goal. Which is the whole purpose of a team. The more specific you can get on your targets and goals, the better it will be for you and your team in the long run.

2. How Does a Business Budget Work?

A business budget can work in two ways.

You are just starting and you set aside money that you allocate or
You analyze a year or set of months that have passed and find the averages as the base of your budget

Ideally, either way you are analyzing what you will be spending and organizing it into categories. Having a software that does this makes this much easier to do than figuring it all out yourself.

The main categories any business would have should include:

Business Budget Category Examples

Payroll/Owner Pay/Bonuses
Marketing
Taxes and Administrative Fees
Operating fees (pens, paper, supplies, furniture, building repair)
Insurances
Product Cost for Inventory
Shipping and/or Website Fees
Rent (Unless you are remote) and other associated costs
Utilities
Reserves
Future Investment (this would include $ set aside for activities that will grow your company in the future like new prototypes or “test” marketing)

Any business will likely have all of these categories that will need to be covered in their business budget. You will want to find out, on average, how much these things will cost vs. your revenue. That will determine your profit margin.

Once you have figured that out, you can go back and see if there are certain expenses that you did not realize were there that can be cut out. Or you might find that there are things that are no longer needed or are being paid for twice. Maybe you have a subscription that you can downgrade to save money. This should be done routinely to maintain a good profit margin and avoid unnecessary expenses.

With this budget, you can see how much you want set aside for yourself, bonuses, and reserves. Once you hit that threshold, you can pay yourself more or invest that money back into the company.

3. Different Types of Budgets

There are different types of budgets that are important to know and keep track of at all times. Having these done before creating your master budget will make the process go a lot faster. It is necessary to have all of the following budgets to be able to plan and execute your business strategies. Knowing these numbers off the top of your head will make running your business a lot easier and allow you to have the facts to make the right decisions.

Labor Budget

A labor budget is the cost of having your employees. This would include payroll, bonuses, workers compensation deductions, 401k plan, health plan, payroll processing system etc. This budget would also include raises. You are not going to keep your employees paid at the same amount forever, so your projections should include how much you pay them now and what you will be paying them 6 months to a year from now. You cannot budget for the year with the same payroll amount in December as you had in January. Your business will need to hit certain milestones and goals if you are going to be increasing salaries.

This is also important because you need to have a full understanding of what the labor costs are going to be when you are hiring your first employee to evaluate whether or not it is worth the expense. Or to determine if you can afford the expense. You will have to make well in excess of what the employee will cost or be certain you have enough set aside to get to that point.

Operating Budget

An operating budget is composed of all of the necessary expenses to keep your business operating. This is the bare minimum. This is keeping the lights on and employees paid. Yes, we would like to be making tons of money as an owner and buying new equipment for our office. But an operating budget is the most basic and important expense that your business will not survive without.

Full Budget

The full budget includes all of the budgets mentioned above with the necessary expenses to make the business grow. It will also include owner pay and reserves amounts.

4. Components of a budget

Business Budget Example:

Payroll/Owner Pay/Bonuses

Payroll for all employees
How much you will be paid as an owner and any partners
Bonuses high and low for each staff member

Marketing

All digital marketing
Print marketing
Marketing vendors
Marketing fees

Taxes and Administrative Fees

Payroll Taxes
Corporate taxes
Corporate filing charges
Email accounts
CRM accounts
Software
Additives
Website maintenance fees

Operating fees (pens, paper, supplies, furniture, building repair)

Paper
Pens
Computers
Printer Ink
Supplies for the business
Funds for new furniture
Funds for enhancing or maintaining the building
Snacks or Water for guests
Cleaning supplies
Cleaning Fees

Insurances

Liability Insurance
Worker’s Compensation Insurance
Product Liability Insurance

Product Cost for Inventory
Shipping and/or Website Fees

Stamps
Labels
Boxes
Tissue
Monthly website maintenance

Rent (Unless you are remote) and other associated costs
Utilities
Reserves
Future Investment (this would include $ set aside for activities that will grow your company in the future like new prototypes or “test” marketing)

5. Monthly vs. Weekly Budgets

The importance of a monthly vs. a weekly budget is so that you can see what you need to make on a weekly basis to track your goals. This will enable you to easily see how far off you are from where you want/need to be.

In addition to this, you will be able to clearly see what thresholds you need in your accounts at all times during the week when certain expenses hit. You will be prepared and avoid over-drafting the account.

6. What is Your Budget Missing?

When you come across expenses that you forgot to add to your budget, note them down. This way, when you sit down to go over your budget, you will have those items to add to the list. You can easily do this by reviewing your bank statement at the end of each month and adjust the budget accordingly.

7. Business Budget Example Mistakes

The main business budget mistake would be not having a budget at all. The second one would be not updating it regularly. And the third would be not operating off of your budget. It is important to have a budget, but it is more important to use it. You want to create goals big enough to well exceed your budget and you want your whole team on the same page.