How to Create a Free Budget for Your Small Business

May 10, 2024
minutes to read
Alice Surdy
Table of Contents

Creating and managing a budget is crucial for financial success, but many small business owners avoid it. According to a survey by Thriday, nearly 55% of small businesses in Australia don't have a documented budget. Furthermore, 70% of those without a budget go on to experience cash flow challenges. That's where Thriday comes in - our all-in-one financial management platform can help small businesses create and manage a budget. In this article, we'll explore the basics of small business budgeting and provide tips and resources for creating a successful budget using Thriday.

What is a Budget?  

budget is a financial plan outlining your expected income and expenses over a specific period. It's crucial for small business owners because it helps you stay on track with your financial goals and make informed decisions about your business. With a budget, you can identify areas where you may be overspending or have room to invest more. By tracking your expenses and income, you can also identify potential cash flow issues before they become bigger problems. Like anything in business, if you track it, you can improve it, and having a budget is an essential tool to master for small business owners who want to stay financially healthy.  


Understanding Small Business Budgeting    

At Thriday, we understand the importance of budgeting for small businesses. That's why we've created various budgeting tools that make it easy to get insights into your business's financial performance. Small businesses must have a budget to operate successfully and make informed decisions. Yet, many small businesses struggle with budgeting, leading to financial problems. Businesses with a budget are more likely to succeed financially. In the next section, we'll explore how to create a small business budget.  


Creating a Small Business Budget  

Starting a budget can seem overwhelming, but it doesn't have to be. Here are some steps to help you get started:  

  • Determine your financial goals: What do you want to achieve with your budget? Are you trying to save for a specific purpose, such as buying new equipment or expanding your business? Or are you trying to achieve a profit? Knowing your goals will help you create a budget tailored to your needs.  
  • Calculate your income: Determine how much money you bring in each month. This includes revenue from your business, as well as any other sources of income you may have.  
  • Track your expenses: Keep track of all your business expenses and receipts for at least a month. This will help you understand where your money is going and identify areas where you can cut back. You can also use Thriday's automatic categorisation engine to see a grouping of your expenses. 
  • Categorise your expenses: Organise your expenses into categories, such as rent, utilities, supplies, and advertising. This will make it easier to see where you spend the most money.  
  • Set limits for each category: Set a realistic spending limit based on your income and expenses. This will help you stay on track with your budget and avoid overspending.  
  • Monitor your progress: Keep track of your monthly spending to ensure you're staying within your budget. Adjust your spending as needed to keep on track with your financial goals.  
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Free Budget Templates and Spreadsheets  

There are many free resources available that can make the budgeting process more accessible. The good news is that many free budget generators and spreadsheets are designed to be user-friendly, even for those with limited accounting knowledge. Here are some recommendations for free budget generators and spreadsheets:  

  • Google Sheets: Google Sheets is a free, cloud-based spreadsheet program that is easy to use and allows for real-time collaboration.  
  • The Australian Government business website has some free information on budgeting, including a free budget template.  
  • Thriday: Thriday's free tools allow you to create multiple bank accounts*, automatically categorise your spending, and then track your overall income and expenses. You can also generate financial reports and export your transactions and summaries into a spreadsheet. 

To use a free budget template or spreadsheet effectively, it's important to customise it to fit your business's unique needs. This may involve adding or removing categories, adjusting spending limits, and updating them regularly to reflect changes in your business's financial situation. By creating a budget, you can take control of your small business's finances and make informed decisions about your financial future.  


Tracking Small Business Expenses  

Tracking small business expenses is crucial to creating an accurate and effective budget. Here are some reasons why tracking expenses is essential:  

  • Helps you make informed decisions: By tracking your expenses, you can identify areas where you can cut costs and make more informed decisions about where to allocate your resources.  
  • Simplifies tax preparation: Keeping track of your yearly expenses can make tax season much less stressful. You'll have all the information you need to file your taxes accurately and on time.  
  • Improves cash flow management: By keeping track of your expenses, you can better manage your cash flow and ensure that you have enough funds to cover your business's expenses.  

You can create a cost-tracking spreadsheet to track your small business expenses effectively. Here's how to create a cost-tracking spreadsheet:  

  • Join Thriday for free: Thriday has an automated expense management tracker that looks at your bank transactions in real-time and determines the deduction status and GST.  
  • Pull a transaction extract from Thriday: Thriday automatically categorises your transactions to a Chart of Accounts. You can then export this data from Thriday into a CSV or PDF.  
  • Review regularly: Review your cost-tracking spreadsheet regularly to identify areas where you can cut costs or reallocate resources.  
See your budget in one simple dashboard


Managing Advertising Costs for Small Business  

Advertising is an important component of small business growth, but it can also be expensive. Managing your advertising costs effectively is crucial to ensure you get a good return on your investment (ROI). Here are some tips for managing your advertising costs:  

  • Set an advertising budget: Determine how much you can afford to spend on advertising each month or quarter. This will help you stay within your budget and avoid overspending.  
  • Choose cost-effective advertising methods: There are many cost-effective advertising methods available, such as social media marketing, email marketing, and search engine optimisation. Consider using these methods to save money.  
  • Assess your advertising ROI: Regularly analyse your advertising ROI to determine the most effective methods. This will help you decide where to allocate your advertising budget.  
  • Negotiate rates: Feel free to negotiate advertising rates with media outlets or publishers. You can get a better deal by negotiating.  
  • Monitor your advertising spend: Keep track of your spending on advertising and compare it to your advertising budget. This will help you identify any overspending or underspending.  


By managing your advertising costs effectively, you can ensure your small business gets the most out of its advertising budget. This will help you achieve your business goals more efficiently and effectively.  


Automating Small Business Accounting   

Managing your small business accounting can be daunting, especially if you're unfamiliar with accounting principles. However, having accurate financial records is essential to make informed business decisions. One way to simplify the accounting process is to automate it. Here are some benefits of automating your small business accounting:  

  • Increased accuracy: Automated accounting software, like Thriday, reduces the risk of human error, which can lead to inaccurate financial records. This can help you make more informed business decisions and avoid costly mistakes.  
  • Timesaving: Automating your accounting process can save you time, which you can use to focus on other aspects of your business, such as sales and marketing.  
  • Better financial insights: Automated accounting software can provide you with real-time financial insights, which can help you make informed business decisions. You can track your business's financial health, identify trends, and forecast future financial performance.  
  • Improved compliance: Automated accounting software can help you comply with tax regulations and other financial reporting requirements. This can save you time and money by avoiding penalties for non-compliance.  


By automating your accounting process with Thriday, you can save time, reduce the risk of errors, and gain better financial insights, helping you make more informed business decisions.  

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ATO Compliance for Small Business Budgeting and Accounting  

As a small business owner, ensuring that your budgeting and accounting practices comply with the Australian Taxation Office (ATO) regulations is important. Non-compliance can result in costly penalties and even legal action. Here are some tips to help you stay compliant with ATO regulations:  

  • Keep accurate financial records: Accurate financial records are essential for compliance with ATO regulations. You should keep detailed records of your business income, expenses, and transactions. This will help you prepare accurate tax returns and financial reports.  
  • Understand your tax obligations: As a small business owner, you are required to pay taxes, including income tax, goods and services tax (GST), and payroll tax. Understanding your tax obligations and ensuring you pay the right amount of tax on time is essential.  
  • Seek professional advice: If you need clarification on your tax obligations or how to comply with ATO regulations, seek professional advice from a tax accountant or financial advisor. They can provide you with guidance and help you avoid costly mistakes.  

Thriday can help you stay compliant with ATO regulations by providing a free budgeting tool designed to help small businesses manage their finances effectively. With Thriday, you can create multiple business accounts, track expenses, and generate reports that comply with ATO regulations. This can help you avoid costly penalties and ensure your business stays on track financially.  

Budgeting FAQs

What is a business budget?

A business budget is a financial plan that outlines a business's expected income and expenses over a specific period, usually a year.

Why is budgeting important for a business?

Budgeting is vital for a business because it helps you plan for the future, manage your cash flow, and make informed decisions about spending and investment. It can also help you identify potential issues and adjust before they become significant problems.

How do I create a business budget?

To create a business budget, you must identify your expected revenue and expenses for the upcoming period. This can be done by reviewing your past financial records, forecasting future sales and costs, and setting financial goals for your business.

How often should I review and update my business budget?

You should review your business budget regularly, at least once a month. This will help you stay on track and make adjustments as necessary based on changes in your business or the economy.

What are some common mistakes to avoid when creating a business budget?

Common mistakes to avoid include underestimating expenses, failing to plan for unexpected costs, not setting realistic financial goals, and failing to track your progress against your budget. It's important to be as accurate and detailed as possible when creating a business budget and to review and adjust it as needed regularly.

Creating and maintaining a budget for your small business is crucial for long-term success. With the right tools and strategies, you can manage your finances effectively, reduce expenses, and improve profitability. Thriday's free budgeting tool is an excellent resource for small business owners who want to streamline their budgeting and accounting processes.  

Remember, budgeting is an ongoing process that requires regular attention and adjustments. It is essential to review your budget periodically to ensure that it aligns with your business goals and financial situation. With the right approach, you can achieve financial stability and growth for your small business.  

DISCLAIMER: Team Thrive Pty Ltd ABN 15 637 676 496 (Thriday) is an authorised representative (No.1297601) of Regional Australia Bank ABN 21 087 650 360  AFSL 241167 (Regional Australia Bank).  Regional Australia Bank is the issuer of the transaction account and debit card available through Thriday. Any information provided by Thriday is general in nature and does not take into account your personal situation. You should consider whether Thriday is appropriate for you.

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