6 Free Expense Budget Spreadsheets For Business

Financial budgeting is a key skill for managing a successful business. A budget is a summary of a business’s finances based on its income and expenses. A business owner can identify their total capital, determine their spending, and predict revenue with a proper budget. A business owner can easily prepare their financial goals for their company with the aid of a budget or plan. 

Expense budget spreadsheet entails the method of devising a financial plan for your business, achieved by estimating costs in alignment with projected income. This process ensures that a business can properly utilize its resources to achieve its short and long-term financial goals. You can keep your business out of debt or find ways to reduce the debt it is currently facing if you properly budget all your expenses. 

Since a budget plan is an important document for any business, you should learn how to create one and know what should be included. 

Statistical Insights: According to a survey by Clutch (How Small Businesses Budget | Clutch.co) in 2020, about 50% of small business owners considered documenting their budgets a useless endeavor. 19% of companies with less than 10 employees did not make a budget. 65% of the small businesses that prepared a budget adhered to it, while only 35% of these businesses spent more than their budget. Experts suggest that these statistics mean businesses should make a budget because they will likely adhere to it.

Given below are expense budget sheet templates:

Why is Budgeting for Expenses Essential for Business?

A budget means that a business has detailed information about its finances and can plan for its expenses. Here are some reasons why budgeting is crucial for any business:

• It allows a business owner to evaluate their finances and make wise decisions to help them achieve the financial goals of their business.
• It enables them to identify the areas in which they need to reduce their spending or the possibilities of increasing their revenue.
• With a budget, an entrepreneur can easily apply for a loan or get investment to expand their business. This means they can easily access funding opportunities if they have a documented budget.
• With the help of a business budget, they can easily identify if they have enough resources to meet their business goals by reviewing their income and expenses.
• An expense plan will help them determine the revenue they must allocate to expenses. This will help them to achieve their internal financial goals.  
• With a budget, an entrepreneur can prioritize projects based on their potential Return on Investment (ROI) and how it could affect their business’s goals.
• Finally, expense budgeting is important as it offers the business a financial plan for unexpected situations that will likely affect their income, such as the COVID-19 pandemic. 

According to a survey conducted by Clutch, 54% of small businesses decided to prepare budgets in 2021 because they saw the benefits of documented budgeting. Furthermore, these businesses had also anticipated a profitable working environment as the effects of the COVID-19 pandemic had begun to decrease. 

If you do not know how to create a budget for your business, here is a step-by-step guide to help you create one:

Step 1: Analyze the costs

Start by analyzing the operating costs of your business. This will give you a proper overview to create your spending plan. As a result, you will have an effective and accurate business budget.  By analyzing the costs, you can know where you can reduce costs to improve the financial situation.

Costs can be divided into four categories: fixed, variable, one-time, and unexpected. In order to have enough cash to cover them, it will be best to base cost calculations on the highest price rather than any seasonal discounts or negotiated prices. 

Keep in mind that this step is highly significant for your budgeting process. You will not meet your financial targets if you prepare a budget without analyzing the costs and later realize that you need more capital. 

Tip: If you have a new business that does not have sufficient historical financial data, then you should use projected costs and include the start-up costs in the budget. For example, if you are starting a printing business, use the expected price of the printer as the projected cost in your budget.

Step 2: Negotiate costs

Once you know the costs, the next step is to negotiate prices with your suppliers. Try and get discounts for the materials you need for your business to help you reduce your costs. Such a relationship can only be developed if you have worked with the suppliers for a long time and usually make your payments on time. You can encourage them to give you discounted rates by paying in advance. 

Step 3: Estimate your revenue

For the third step, you need to estimate your revenue to identify how you will meet your operational costs. Use your previous year’s revenue as a reference point for a proper estimate. This step is meant to reduce the need to seek loans to cover your costs. Therefore, you must be realistic when estimating your revenue. This way,  you will be able to work within your budget. It’s a good idea to track your revenue on a monthly, quarterly, and annual basis.

Step 4: Determine your gross profit

Gross profit is the amount of cash that is left after subtracting all your expenses. Your gross profit will help you determine your business’s financial health. A good financial year is one where your revenue is greater than your expenses, which means you have a gross profit. 

Step 5: Project cash flow

Cash flow includes customer payments and vendor payments. By balancing these two payments, your business will have a steady cash flow. Encourage your customers to pay on time by developing a flexible payment schedule, setting up payment channels, and having a proper system to handle late payments. 

You can also include a section on “bad debt”  in your budget for customers who fail to pay. This means that you will always have incoming cash flow to pay your employees’ salaries, clear debts, handle vendor expenses, and initiate new business projects.

Step 6: Consider seasonal and industry trends

Your budget should factor in fluctuations in sales due to the ever-changing industry trends and seasons. This way, you will protect your business from closing during low sales periods. Furthermore, you will always be aware of your high sales periods, where you can maximize the revenue. That means you will know how much to save to sustain your business during the dry season.  

Step 7: Set spending goals

Your budget is not all about income and expenses; it also includes saving some of your earnings. Setting your spending goals will help you avoid unnecessary expenses while also saving some money. Also, you can easily and effectively cut costs and only invest in expenses that are beneficial to your business.

For example, if you want to buy equipment that will be used occasionally, you can cut your expenses by leasing the equipment instead of purchasing it.  

Step 8: Compile everything

For the final step, compile all the information you have gathered and create an expense budget for your business. At this point, you should be aware of your fixed and variable expenses. You should also account for those unexpected one-time expenses. By subtracting these expenses from your income, you should have an estimated amount of what you can use to achieve your financial targets of your business.

There are five essential considerations that you should have in mind to ensure that you have an effective budget when preparing one. They are discussed below:

Be flexible

Always keep your budget flexible so that you can deal with unforeseen circumstances. By having a flexible budget, you can easily adjust your spending or costs to accommodate changes in the industry or during times of economic turbulence. This way, you will increase your chances of remaining within your budget.

Make adjustments as needed

Use historical financial data to ensure that you make an adjustment to the budget whenever needed. If you needed to spend more on some items in the past or you overestimated some costs, you can adjust your current budget accordingly. 

Do not forget to update regularly

A budget needs to be updated regularly. You must always track your finances, review the categories in your budget, and update them accordingly. Your business needs will likely change; thus, you must update your budget appropriately to reflect the updated  revenues and expenses.

Add contingencies

Always add a contingency plan to your budget. You can accommodate sudden financial changes without spending more than what is in your plan if you properly plan for unexpected costs or changes to revenue. 

Use a template

Finally, use premade templates to create an accurate expense budget for your business. You can access them on this website to make your work easier. These templates will save you time and guarantee you include all the information required to make your business budget effective.

• It is advisable to create an expense budget for your business. With a proper spending plan, you will have an overview for the total revenue and expenses of our business.
• For your business to achieve its long and short-term financial goals, you must have a budget and strive follow it.
• Even as a new business, it is important to prepare a budget using estimates and projections.
• An adequate business budget can provide you with insights regarding the financial decisions you should make for your business’s growth and prosperity in the future.
• Creating a budget does not have to be difficult. You can use an expense budget template to create a proper and accurate budget.