Budget for Businesses: How to Get Started

A budget is a plan for income, costs, and payments for a future period. It helps management allocate resources, identify financing needs, and react before deviations become critical.

Profit Budget

The profit budget shows expected income and costs. Start with realistic sales assumptions: price, volume, season, and capacity. Then include cost of goods sold, salaries, premises, marketing, depreciation, interest, and other costs.

Document your assumptions. This allows you to differentiate between a poor result because sales were lower, and a deviation because costs were higher.

Liquidity Budget

The liquidity budget shows when money actually comes in and goes out. A company can have a paper surplus yet still lack funds for salaries, VAT, or suppliers because customers pay later.

Include payment deadlines, VAT terms, tax, investments, repayments, and seasonal variations. Monitor the balance monthly, or more frequently if cash flow is tight.

Budget versus Accounts

A budget only becomes useful when compared to actual figures. Review deviations regularly, update the forecast, and agree on who is responsible for corrective actions. Do not change the original budget every time reality shifts; keep it as a reference and create a revised forecast.

On Proffi

Proffi can use public accounts and industry data as a basis for comparison, but a business's own budget is private and forward-looking. Clearly distinguish between historical source data, user assumptions, and calculated forecasts.

Source

• Altinn: Budgets during the operational phase