how to create a business budget from scratch
Creating a business budget from scratch is one of the smartest things you can do when starting or running a business—it helps you plan spending, forecast income, avoid debt, and make confident decisions.
Heres a step-by-step guide to create a simple, effective business budget (even if you're just getting started):
? Step 1: Know Your Business Type & Timeline
Ask yourself:
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Is this for a new business or an existing one?
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Are you budgeting monthly, quarterly, or annually? (Start monthly for beginners)
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Are you selling services, products, or both?
? Tip: Start with a 36 month budget and refine it as you grow.
? Step 2: Estimate Your Income
Make a list of all expected revenue sources. Try to be realistic (or conservative).
Example (for a home bakery):
| Source | Estimated Monthly Income |
|---|---|
| Custom cake orders | ?20,000 |
| Cookie box subscriptions | ?8,000 |
| Weekend stall sales | ?5,000 |
| Total Revenue | ?33,000 |
If you're not earning yet, project based on how many customers you realistically expect to get, and at what price.
? Step 3: List All Fixed Costs
These are recurring monthly expenses that dont change much.
Examples:
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Rent or workspace: ?3,000
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Internet & phone: ?800
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Website hosting or Canva Pro: ?500
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Staff/assistant salaries (if any): ?5,000
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EMI/loan payments: ?2,000
| Fixed Expenses | Monthly Cost |
|---|---|
| Workspace rent | ?3,000 |
| Canva Pro | ?500 |
| Phone/Internet | ?800 |
| Total Fixed Costs | ?4,300 |
? Step 4: List All Variable Costs
These costs change depending on your sales or activity.
Examples:
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Raw materials or inventory (e.g., flour, packaging)
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Delivery or shipping
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Advertising spend
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Transaction fees (e.g., Razorpay, PayPal)
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Freelancers or part-time help
| Variable Expenses | Estimated Monthly Cost |
|---|---|
| Ingredients & packaging | ?6,000 |
| Shipping/courier | ?1,500 |
| Instagram ads | ?1,000 |
| Razorpay fees | ?300 |
| Total Variable | ?8,800 |
? Step 5: Set Aside for One-Time & Emergency Costs
These are non-monthly but important:
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New equipment (e.g., oven, camera, laptop)
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Emergency fund (for low-sale months)
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Business registration, licenses
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Taxes (if applicable)
? Tip: Save at least 10% of your monthly income for unexpected expenses or future growth.
? Step 6: Put It All Together
Business Budget Summary Example:
| Category | Amount (?) |
|---|---|
| Estimated Income | ?33,000 |
| Fixed Costs | ?4,300 |
| Variable Costs | ?8,800 |
| Savings/Reserve (10%) | ?3,300 |
| Estimated Profit | ?16,600 |
? Step 7: Track Monthly & Adjust
Use tools like:
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Google Sheets or Excel
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Notion budget template
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Free apps: Wave, Zoho Books, Vyapar (India)
Each month, update:
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Actual income vs projected
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Unexpected expenses
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Where you overspent or underspent
Adjust your next months budget accordingly. Over time, it becomes much easier and more accurate.
? Bonus Tips for Beginners
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Start lean: Don't overspend on things that dont generate income
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Reinvest wisely: Use part of your profit to improve your product, marketing, or tools
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Dont forget taxes: Set aside 1020% of profits for tax payments if applicable
Want a Ready-to-Use Budget Template?
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