A cash budget, also known as a cash flow budget, offers an estimate of money spent and invested during a business’ budget period. A cash budget provides details that can be used to make financial decisions, detect shortfalls and prevent overspending.

What is Budgeting

What is a business budget?

1. Your estimated revenue

This is the amount you expect to make from the sale of goods or services. It’s all of the cash you bring in the door, regardless of what you spent to get there. This is the first line on your budget. It can be based on last year’s numbers or (if you’re a startup), based on industry averages.

2. Your fixed costs

3. Your variable costs

These change according to production or sales volume and are closely related to “costs of goods sold,” i.e., anything related to the production or purchase of the product your business sells. Variable costs might include raw materials, inventory, production costs, packaging, or shipping. Other variable costs can include sales commission, credit card fees, and travel. A clear budget plan outlines what you expect to spend on all these costs.

The cost of salaries can fall under both fixed and variable costs. For example, your core in-house team is usually associated with fixed costs, while production or manufacturing teams—anything related to the production of goods—are treated as variable costs. Make sure you file your different salary costs in the correct area of your budget.

4. Your one-off costs

5. Your cash flow

Cash flow is all money traveling into and out of a business. You have positive cash flow if there is more money coming into your business over a set period of time than going out. This is most easily calculated by subtracting the amount of money available at the beginning of a set period of time and at the end.

6. Your profit

Profit is what you take home after deducting your expenses from your revenue. Growing profits mean a growing business. Here you’ll plan out how much profit you plan to make based on your projected revenue, expenses, and cost of goods sold. If the difference between revenue and expenses (aka “profit margins”) aren’t where you’d like them to be, you need to rethink your cost of goods sold and consider raising prices.

7. A budget calculator

A budget calculator can help you see exactly where you stand when it comes to your business budget planning. It might sound obvious, but getting all the numbers in your budget in one easy-to-read summary is really helpful.

In your spreadsheet, create a summary page with a row for each of the budget categories above. This is the framework of your basic budget. Then, next to each category, list the total amount you’ve budgeted. Finally, create another column to the right—when the time period ends, use it to record the actual amounts spent in each category. This gives you a snapshot of your budget that’s easy to find without diving into layers of crowded spreadsheets.

Sales – Product 1$25,000$22,000-$3,000
Sales – Product 2$34,000$36,000+5000,000
Revenue – Coaching$9,000$8,900$-100
Revenue – Sublease$13,000$13,000

Small business budgets for different types of company

Seasonal businesses

Because your business isn’t consistent each month, a budget gives you a good view of past and present data to predict future cash flow. Forecasting in this way helps you spot annual trends, see how much money you need to get you through the slow months, and look for opportunities to cut costs to offset the low season. You can use your slow season to plan for the next year, negotiate with vendors, and build customer loyalty through engagement.

Don’t assume the same thing will happen every year, though. Just like any budget, forecasting is a process that evolves. So start with what you know, and if you don’t know something—like what kind of unexpected costs might pop up next quarter—just give it your best guess. Better to set aside money for an emergency that doesn’t happen than to be blindsided.

Ecommerce businesses

Do you have space in your budget to cover shipping to customers? If not, do you have an alternative strategy that’s in line with your budget—like flat rate shipping or real-time shipping quotes for customers? Packaging can affect shipping rates, so factor that into your cost of goods sold too. While you’re at it, consider any international warehousing costs and duties.

You’ll also want to create the best online shopping experience for your customers, so make sure you include a good web hosting service, web design, product photography, advertising, blogging, and social media in your budget.

Inventory businesses

If you need to stock up on inventory to meet demand, factor this into your cost of goods sold. Use the previous year’s sales or industry benchmarks to take a best guess at the amount of inventory you need. A little upfront research will help ensure you’re getting the best prices from your vendors and shipping the right amount to satisfy need, mitigate shipping costs, and fit within your budget.

The volume of inventory might affect your pricing. For example, if you order more stock, your cost per unit will be lower, but your overall spend will be higher. Make sure this is factored into your budget and pricing, and that the volume ordered isn’t greater than actual product demand.

Custom order businesses


Budgeting is tricky for startups—you rarely have an existing model to use. Do your due diligence by researching industry benchmarks for salaries, rent, and marketing costs. Ask your network what you can expect to pay for professional fees, benefits, and equipment. Set aside a portion of your budget for advisors—accountants, lawyers, that kind of thing. A few thousand dollars upfront could save you thousands more in legal fees and inefficiencies later on.

Service businesses

If you don’t have a physical product, focus on projected sales, revenue, salaries, and consultant costs. Figures in these industries—whether accounting, legal services, creative, or insurance—can vary greatly, which means budgets need flexibility. These figures are reliant on the number of people required to provide the service, the cost of their time, and fluctuating customer demand.

Cost of Goods Sold$12,000$13,243+800,243

Small business budgeting templates

Smartsheet has multiple resources for small businesses, including 12-month budget spreadsheets, department budget templates, projection templates, project-by-project templates, and startup templates. These templates are ideal if you’re looking for a little more detail.

Budgeting + bookkeeping = a match made in heaven

Making a budget is kind of like dreaming: it’s mostly pretend. But when you can start pulling on accurate historical financials to plan the upcoming year, and when you can check your budget against real numbers, that’s when budgets start to become useful.

What’s Bench?

We’re an online bookkeeping service powered by real humans. Bench gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts. We’re here to take the guesswork out of running your own business—for good. Your bookkeeping team imports bank statements, categorizes transactions, and prepares financial statements every month. Get started with a free month of bookkeeping.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

Office Move$3,000$3,300-$300

What components make up a business budget?

Sales and revenue

An effective budget must include the revenue a company expects to make from the sale of its goods or services. It is typically the first line in a budget and is based on last year’s actual revenue amounts plus projections for the current year.

Total costs and expenses

Budgeting in business requires estimating the costs of doing businesses. Business expenses can include a variety of costs related directly to production and operations along with overhead costs. Expenses generally include:

Cost of goods sold (COGS)

COGS is the total cost of what it takes to make a product. For example, a manufacturing company that produces car parts may include the costs of raw materials, equipment maintenance and specialized personnel to run the machines within its COGS. The revenue minus the COGS results in the gross profit.

Fixed expenses

include all the regular and consistent expenses of a business. Fixed expenses remain unchanged during the budgetary period and include costs for things like property mortgage or rent payments, insurance, utility fees, employee wages, monthly bank fees, license fees and equipment and property leases.

Variable expenses

One-off expenses

A one-off expense is a one-time fee or payment like a large supply purchase or the cost to move business locations. Businesses include one-off expenses in their budgets to accurately represent the expenses they cover.


A profit is when the money a business earns is more than the money invested. An increase in profit means the business is growing or staying financial healthy. Companies use profit estimates to plan for new equipment purchases, relocation, add staff or provide employee bonuses or raises. Profits are a key component of any budget equation: Sales = Total Cost + Profit.


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