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Treasury Management Article

How to Analyze Your Small Business Budget

People looking over business figures at a table

In our recent blog post, 6 Steps to Create a Budget for Your Small Business, we shared reasons why budgeting is so important for small businesses and outlined steps to create your own small business budget. Now that you’ve gathered your income sources and expenses, it’s time to pull it all together so you have a comprehensive view of your finances each month.

You’ll first want to tally your total income and total expenses. To do so, add your total fixed costs, variable expenses, and one-time spends, then compare cash flow in (income) to cash flow out (expenses) to determine your business profitability.

Are you still having a hard time envisioning what your business budget might look like? Here’s a very simplistic example of a budget to give you an idea of how your own budget might look each month:


Client hourly earnings: $12,000

Product sales: $4,000

Savings: $1,000

Investment income: $500

Total income: $17,500


Fixed Expenses

Rent: $1,600

Internet: $50

Payroll costs: $5,000

Website hosting: $50

Insurance: $50

Cell phone: $100

Accounting services: $100

Legal services: $100

Total Fixed Costs: $7,050

Variable Expenses

Sales commissions: $2,000

Contractor wages: $500

Electricity bill: $125

Gas bill: $75

Water bill: $125

Supplies: $300

Digital advertising costs: $750

Transportation: $75

Total Variable Expenses: $3,950

One-time spends

Office furniture: $500

December client Christmas party: $1,000

New time tracking software: $500

Client entertainment: $200

One-Time Spends: $2,200

Total Expenses: $13,200 Total Income ($17,500) - Total Expenses ($13,200) =Total Net Income ($4,300)

Having a clear picture of your profitability each month will enable you to make the right financial decisions for your small business going forward. For example, if you realize you’re spending more than you earn too often, you might need to cut your spending and focus on finding new business. On the other hand, if your income is usually significantly higher than your expenses, you might need to invest some of your profits back into your business, like purchasing upgraded software or equipment.

Review your business budget periodically

Putting in the work to create your budget will probably not be the most enjoyable aspect of starting your business. However, investing a little time and energy will pay off in its future success. Regularly reviewing your business budget will give you the financial insights necessary to make sound decisions for your business so you see growth down the road.

Get help with the financial aspects of your business

Many small business owners purchase accounting software that help them manage all of the financial aspects of their business, such as QuickBooks. In addition to software, a good CPA can assist in managing your budget, correcting your path when spending gets off track, and making sure you’re paying the necessary taxes for your business - while at the same time, minimizing your tax burden.

In addition to accounting software and a CPA, you need a trusted business banking partner who will listen to your goals and help you achieve them financially. Stellar Bank’s full and flexible suite of treasury management services can help with the heavy operational lifting, making your business stronger and your job easier. If you’re ready to get started, contact usand one of our business banking associates will reach out to you.

Want to keep growing your knowledge of financial basics? Check out the Stellar Bank Financial Education page.

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