Small Business Forecasting and Budgeting Tips

small business forecasting

To most people, the word “budget” elicits thoughts and feelings of being limited. It means curtailing impulse spending, drawing out payments over time, and being realistic with income. Business budgeting incites similar feelings. It means taking minimal risks with the business and sacrificing short-term gains for long-term goals. Having a successful budget for your small business requires careful forecasting, which may not sound like fun, but numbers can be exciting when they work in your favor. Here are a few small business forecasting tips that will help get your budget in line.

Fixed Expenses

These include rent, mortgage, utilities, insurance, and fees. Break down lump sum payments into monthly payments over time. If your insurance payment is only due once or twice a year it can throw your month’s expenses off balance. Break it down into monthly payments so the money accumulates before the payment is due and you don’t end up short.

Variable Expenses

These change from month to month, including cost of goods, inventory, shipping, and payroll. Your forecast is key for determining your monthly variable expenses. The sales forecast will help you determine how much inventory to order. If your business is seasonal it will dictate the number of employee hours you’ll need to schedule. Overestimating your expenses can help you come in under budget and the surplus can go towards a savings account for future investments.


small business forecasting

Remember your employees are people, not numbers. Cutting hours or skipping raises to meet a bottom line may help you make your numbers for this quarter, but your employee morale will suffer. You may create a negative work environment where productivity declines. People may quit leading to the inferred costs of recruiting qualified new employees including job posting, interview time, and training. Take care of your employees to the best of your ability and they will take care of your business.


Update your tax obligation quarterly. As your income increases, so too can your tax percentage. Accurate tax recording can save you from IRS and state penalties.

Update Budget Numbers Often

If you only work up a budget once a year, you’re opening yourself up to huge inaccuracies. Start with quarterly budget updates and break it down by month.

Manage Cash Flow

Nothing can throw off a budget faster than incorrect cash flow statements. Accounts receivables that aren’t paid on time, invoices paid in cash and not properly recorded, inventory shrinkage left on the warehouse floor, etc. Accurate cash flow will be a key factor in your forecasting.

Get in on the Cloud Trend

If your budget figures are stuck on a desktop in an excel spreadsheet, you won’t have real-time updates. Make your budget accessible by utilizing QuickBooks cloud accounting software. Update your figures from anywhere using your phone, tablet, or wifi-connected laptop. You aren’t chained to a desk with cloud accounting. Best of all you can designate multiple users to have access to the books so the right people can update their figures instantaneously.

Hire Professionals

A small business doesn’t always have the resources to support an in-house bookkeeper. Hiring a professional mobile accounting firm like Prestige Bookkeeping gives you the advantage of a second set of eyes. We can do a survey of your books, make recommendations and adjustments, and train you in budgeting and cash flow forecasting so you can keep your books in shape. Call us anytime for a consultation and we will tailor a program to fit your needs.

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