A Budget is a Business Essential

As a business owner, a clear and practical budget helps you take control of your finances and make informed decisions throughout the year.

A budget shows what you plan to do with your cash in the coming 12 months. When used in conjunction with your profit and loss statement, balance sheet, and cash flow forecast, it provides a comprehensive view of business performance.

With the new financial year approaching, now is the right time to put a budget in place.

Why Budgeting Matters

A good budget helps your business:

• Forecast income and expenses based on monthly or quarterly patterns.
• Track performance and spot changes early.
• Understand where your money is coming from and where it is going.
• Set clear financial goals and stay focused on them.
• Compare actual results to projected figures to identify issues before they grow.
• Stay accountable and motivated by keeping a clear view of the bigger picture.

Getting Started

Begin with a simple cash-based budget. Use your known income and expenses, and make realistic assumptions about future activity.

As your confidence grows, your budget can become more detailed. You might start including non-cash items such as depreciation and provisions.

Many businesses find it helpful to prepare three versions of their budget:

• Business as usual: based on current income and expenses, with small adjustments
• Best case: reflecting stronger growth or new opportunities
• Worst case: allowing for lower sales or unexpected challenges

Budgets are usually set for a financial year but can also cover two to five years to support longer-term planning.

Use Your Budget to Stay on Track

Once your budget is in place, use it. Compare your actual financial results with your budget regularly to understand how your business is tracking.

Reviewing this monthly helps you stay in control, adjust plans quickly and avoid surprises later in the year.

Ready to Set Your Budget?

Now is the ideal time to put a budget in place for the 2024–25 financial year. We help businesses establish practical budgets that support growth and enhance decision-making.

Do you need help setting up a meaningful budget in your accounting software? Get in touch today.