Small Business Budgeting: A Step-by-Step Guide (FREE TEMPLATE)

Budgets, they're like cups of coffee. Too small and you won't get anything going, but too large and you run the risk of everyone getting a little wild eyed and jittery. I mean, if we're being honest, that sounds like a pretty cool, pretty cool Wednesday night. But that's neither here nor there. Okay, that may be a bit of an exaggeration, but the fact is that budgets are a core factor of successful marketing. A well tuned budget can take your strategy from basic to supercharged, helping you grab hold of business potential and turning it into smooth, smooth reality. But it's not as easy as a snap of the fingers because. Cause even with a snazzy, super user friendly template like the one we've linked down below, which I'll be taking you through today, you're very welcome. There are a few key essentials you need to know in order to go from budget beginner to budget big leaguer. Let's get to it. So if you're watching this video right now, you obviously know what a budget is. And chances are you've probably come up against them once or twice. 3, 4, 5, 20, 30, 130,000 times in your career eyeing some new software. Whoops. Finance says no, no, no, no. Bummer. But those budgets are also very necessary. Why? Because they help keep everyone on track and accountable. So let's look at the basic anatomy of a marketing budget. Marketing budgets, at a minimum, will focus on projecting revenue, tracking expenses and calculating profits. The more information you input, the more accurate that information is, the better your projections will be. And that's important because budgets also serve as a financial roadmap for for the team and the wider business. It's easier to make plans for the future when you've got a view of projected spend and revenue. And knowing how much you've spent in one area of your marketing means you can track the cost benefit of specific actions and use that to influence your future budgets. Say you work for a vitamin company. Every quarter you set a budget of about $2,500 on paid advertising, with the exception of last quarter where you reduced the budget to $1,000. If you see the number of customers or website interactions dip significantly in that last quarter, you might attribute that reduction of advertising spend. Obviously, in the real world, there are often multiple factors at work in the background, but the most important thing is that budgets can give you a bird's eye view of relevant operational data, which can help you make better decisions going forward. And obviously it helps you manage your business spend. We can't forget about that now there are two types of budgets. Traditionally, businesses tend to create static budgets. These are fixed annual budgets planned and updated just once a year, typically in the fourth quarter. You can think of static budgets like numbers that are carved in stone. They don't change no matter what shift happened in the business over that time period. Changes are mostly made at the start of the next financial period, at which point you get a fresh, lovely new piece of stone to carve your numbers into. Rolling budgets, on the other hand, known also as rolling forecasts or continuous budgets, are dynamic and adaptable. With them, you decide on the budget for the next time period immediately after the current one elapses. In most cases, rolling rolling budgets are updated monthly or quarterly. And since they're not set in stone, rolling budgets can give you a bit more flexibility, but they also require a bit more work. There's a clear trade off, but more on that in a bit. So let's take a closer look at how rolling budgets work using that handy dandy budget template I showed you a bit earlier. Don't forget you can get your own copy from the link below. Let's focus on the master marketing budget sheet for now. So let's take our vitamin company example from earlier. For simplicity's sake, we'll use the pre filled numbers as our existing budget. Everyone gets $100. Sweet, sweet parody. But say we realize that branding and creative are consistently using more budget than events. For example, with a rolling budget we can take that into account and make a shift in the numbers, provided there's a good reason for that difference. Or we could adapt different budgets for the next quarter to account for the changing circumstance. Say if I know a competitor is upping their marketing budget and we don't want to lose out in any way. That's just one of the many situations where rolling bud could come in handy. Now I will caveat here to say rolling budgets can be tricky to get right. They can be time consuming, resource heavy and may incur additional costs. But if you can make rolling budgets work for you, they can be a game changer for the business because they allow you to adapt to change fast enough to make a difference. Bringing us back to our vitamin business example, say a new health supplement starts trending. Every influencer worth their salt is on social media bragging all about this brand new vitamin. With a rolling budget, you can quickly assess the potential impact this trend may have on sales and adjust your budget accordingly, such as by reallocating resources. To capitalize on this surge in interest, you can redirect money to boost your advertising efforts in order to get more eyes on your products quickly. These budgets also help you manage performance, improve financial accountability, and make other decisions. Why? Because it's easier to take corrective action when you're regularly reviewing the business numbers. Rolling budgets are particularly useful for businesses that really need to stay agile, such as startups and young companies. Because these companies typically have a phase of rapid growth and development, any delay or failure to react to changing circumstances can be a death knell for the business. Hence, rolling budgets make it possible to respond to market shifts, emergent opportunities, and unexpected challenges in a timely manner. Young businesses also face another limited historical data. Most budgets are built on the foundation of past decisions and learnings over time. But a new business is less likely to have reliable historical information to rely on, which means they need to be able to update and evolve as they learn more about the market, customers and competitors. In this case, utilizing a rolling budget can help with investor confidence by showcasing that the business is proactive about financial planning and able to adapt to changing market conditions plus navigate uncertainty faster. Finally, having a rolling budget can help small businesses in their goal of growing sustainably. By seeing and updating the numbers month to month or every quarter, businesses can monitor the financial implications of scaling and make informed decisions about investments, hiring and expansion opportunities. So that's the why of rolling budgets. Now let's get more into the hands on with our handy, dandy lovely budget template. First, let's take a look at how you can manage your expenses in a marketing budget. Let's start with content expenses. Now obviously, managing content expenses is crucial for driving engagement and brand awareness. Using this spreadsheet, you can easily allocate funds to different content marketing activities. For example, you might budget for content creation, including copywriting, graphic design, and video production. You'd also need to allocate a portion of your budget for tools like design or project management software or even publishing tools like, you know, HubSpot. And by tracking your actual expenses against budget amounts, you can ensure that your content initiatives are well funded and aligned with your marketing goals. The same goes for advertising. Effective budget management is key to maximizing your campaign's reach and impact. So here look at our spreadsheet. We can allocate funds to different advertising channels based on their potential ROI and relevance to our target audience. For example, we might set aside a portion of our budget for paid search advertising, display ads, social media ads, or direct lead generation activities. As the budgeting period progresses, we can monitor the actual cost and optimize our advertising spend to achieve our desired marketing outcomes. You get the picture. Now each of these tabs represents a different budget breakdown. We went through content, marketing and advertising, but there's also a template for public relations, branding and creative website redesigns and events. Everything you might need, really. You'll need to adjust them to meet your business's unique goals. Only ever host webinars and virtual events. Poof. No need for a venue or refreshments. No freelancer needs. Bam. They're gone. So now you're aware with the different types of budgets, let's take a look at reconciling those budgets. In a nutshell, this is your projected spend versus Actual spend. You'll want to check this out at the end of every month to make sure you're still on track. In all of our tabs you can see we have columns for Budget versus Actual. So in the Master Marketing budget, for example, we consolidate all of the figures from our different budgets. We only need to stick to the numbers and up above here the rest of the sheet gets auto populated for us. See. And along with this easy glance section, we can also see how we're doing on this graph. That's automatic too. That budget reconciliation combined with a bit of general business and market awareness is also crucial in helping you make your quarterly forecast. Coming back to our vitamin supplement company, say we look at our historical data and see our advertising expenses were higher last quarter due to a promotional campaign we were running. However, for our upcoming quarter, we know that there will be a lower paid advertising spend. As our focus is shifting to upgrading our website, our awareness of business trends and upcoming events or objectives can help shape the coming forecasts. Now through all of this you got to remember to align your investments to your goals. Make sure you know why these budgets exist and constantly realign your spend to your objectives. That can help you stay aware of budget spend and eliminate unnecessary spend, which is super, super important in tough economic times. That alignment to your objectives can also help with the most difficult part, negotiating future budgets with key stakeholders like the founders or CEO. Knowing your budget and actual numbers through and through is super useful for this. Knowing the reason for out of budget costs will help you provide a convincing case. And that's basically it. Your brief primer on the basics of business marketing budgets. I hope you found this video very helpful and don't forget to check out our free templates linked below. If you have any questions or suggestions for other topics to cover or even just want to share how you're doing your own budgeting, make sure you drop a comment down below. Thanks for tuning in. Until next time, I can't find this client info. Have you heard of HubSpot? HubSpot is a CRM platform so it shares its data across every application. Every team can stay aligned. No out of sync spreadsheets or dueling databases. HubSpot grow better.