How to budget for a small business (UK)

A budget isn't about restricting yourself. It's about never being surprised. Most small-business cash crises aren't from bad sales; they're from costs and tax bills that were always coming and nobody planned for.

Start with what you actually spend

List every cost, split two ways:

• Fixed: the same each month: rent, software, insurance, salaries. Your baseline; you owe them whether you sell anything or not.
• Variable: moves with the work: materials, stock, delivery, transaction fees, contractors.

Go through three months of bank statements, the small recurring subscriptions add up to more than people expect.

Forecast income conservatively

Estimate what you'll bring in, then be cautious. Optimistic forecasts feel good and cause overspending. If a month is uncertain, budget for the lower number; being pleasantly surprised is a far better problem than a shortfall.

Plan for the money that isn't yours

Two categories small businesses routinely forget until it hurts:

• Tax. Set aside a percentage of income as it comes in, for Income Tax or Corporation Tax, and VAT if you're registered, in a separate pot. The money you "have" is smaller than your balance suggests.
• A buffer. Build toward a few months of fixed costs in reserve. It's the difference between a quiet quarter being stressful and being fatal.

Budget for quiet months

Few businesses earn evenly all year. Map your likely highs and lows so a slow January is planned for from a strong autumn, not met with panic.

Review it monthly

A budget written once and ignored is just a guess. Once a month, compare budget to what actually happened, and adjust. Ten minutes monthly prevents most nasty surprises.

Two mistakes to avoid

1. Forgetting the tax pot. The classic. Spending money that was always the taxman's.
2. Only budgeting costs. Without an income forecast beside them, you can't see the gap coming.

The fast way

Vizivo's Business Budget Planner turns your costs and expected income into a clear, categorised budget, fixed vs variable, with tax and buffer built in, for you to review and adjust. It plans the numbers; it isn't accounting software, so once you're tracking real transactions daily, pair it with bookkeeping.