If you're applying for loans to help you with business costs, a sample budget is usually required. This type of budget can also be helpful in anticipating your business expenses for the year. That way you know how much income you need to generate in order to make a profit and can determine where you may be able to cut costs.
Components of a Sample Business Budget
A sample budget usually contains two numerical columns, one for the expenses and one for income, plus a column for labels. Some also include blank lines to include the actual costs. These are filled in later with the real numbers to see how close the estimates were to the actual numbers. You can prepare either a monthly sample budget or a yearly one. Many business owners choose to do both.
Some common expense items in these budgets are:
- Mortgage or rent on the office
- Payroll expenses (salaries, benefits, etc.)
- Depreciation (loss of value on items the business owns)
- Office Supplies
- Marketing and advertising
- Maintenance costs
- Taxes and legal fees
- Interest on money owed
Most also have a line for miscellaneous expenses at the bottom, since it is hard to fit everything into a distinctive category.
Once you've got the expenses in the budget, you need to balance them with your income. Common income line items are:
- Money owed to you
- Dividends on investments
Note that the expenses piece will have a lot more items in it, but that will hopefully be offset by the higher numbers in the income section. This is not often the case in the first couple years a company is in business, which is why start-up capital is so important. Since all businesses are different, all sample budgets will be different also. You don't have to exactly mirror someone else's budget when planning for your business. However, it is a good idea to use one as a template.
Sample Business Budget Software
If you're still not sure how to get started on your budget, there are several software programs that can help you. Three good ones for you to look at are the following:
- Budget Maestro by Centage: This program allows you to make a budget from scratch or based on data from previous years and automatically plugs in recurring expenses.
- Microsoft Quicken Home & Business: This is the one of the most straightforward budget programs out there. Just click on budget in the planning menu to get started. Make sure you designate a business budget and not a personal one.
- Prophix Rapid Budgeting and Reporting Software: This package is more for the established business owner. It lets you create business budget spreadsheets as well as official budgets to prepare for corporate audits.
Microsoft Excel is a great tool to use when creating a business budget sample. Download a template from Lauren Bacon and Emira Mears's The Boss of You website, an excellent site for the female business owner. Then change the numbers and categories to work with your business. You can also use the template as is if you are simple looking for a sample budget and don't need real data at this point. This could be the case if you wish to use it for a presentation to a client and not for your own reasons.
One thing people tend to forget when preparing a sample business budget is to incorporate all of the taxes and fees. For example, if you need to make a purchase for your business, don't forget to build any state or local sales tax into the cost. Also, marketing costs usually have set-up fees and consulting fees, not simply the cost of paper and ink or commercial time. If you're not sure about an expense, always overestimate. After all, it's better to come out ahead than behind.