Budgeting During Uncertain Times

small business accounting advice


Budgeting is always an important tool for businesses and individuals but never more so than now.  You may be having to adapt to receiving 80% of your salary or you could be waiting for a furlough claim to be paid or waiting for the Self-employment Income Support Scheme.  There is probably pressure for you to make cut backs now so that you can live within your means. But where do you start?

Hi, I’m Anna Goodwin – Author of five books, Director, Mentor, and Trainer for Anna Goodwin Accountancy.

Basically, I take the stress out of finances – both business and personal. From running my own business and helping others to run theirs, I know it’s important to budget so that you can plan ahead.

small business accounting advice

In my book ‘Your Business Your Numbers’ I look at the excuses I have heard for not preparing a budget:

  • It’s too depressing
  • What’s the point?
  • Don’t have the time
  • Don’t know where to start
  • I know the expenditure but can’t predict the income

But irrespective of any resistance you may have, you need to take control and learn not only how to budget but also how to stick to it!  But remember if you are furloughed you won’t be able to do even this.

Here are some tips from my online course – Finance for Non-Financial People – on how to budget:

  • Use last year’s figures as a guide but take account of any sales campaigns you are planning this year which will impact on the figures or any online sales
  • Create realistic budgets – don’t overestimate income or underestimate costs
  • Monitor the key drivers of your business – such as sales, costs and working capital
  • Involve the right people – don’t work on the budget in isolation; ask staff with financial responsibilities to provide you with estimates of figures for your budget, eg. Sales targets, production costs If staff are furloughed and can’t give you this information then use your best guesstimate.
  • Review regularly
    This is especially important now as there are likely to be big changes in your costs and income. You may find your transport and networking costs are down but maybe you are not getting the same income.
  • And one from my latest book – Use your figures to prepare your budget for success, using the table outlined in ‘Your Business Your Numbers’.

I was presenting on the Sanctuary Revival Virtual Women’s Club yesterday.  Budgeting was just one of the topics in my talk.  An attendee, who makes jewellery, said how difficult it is to plan at the moment because of uncertainty.  She explained: I don’t know how many people will buy and there is a possibility of not being able to get enough materials.

I said yes, there is extreme uncertainty now but there is always uncertainty; you never know how many people will buy.  It could be 1, it could be a 1000!  Income is always an area that brings up people’s resistance when budgeting as they don’t know the answer.  But, as I always say, you need to have a budget so you’ll have to use your best guesstimate.  This will be based on previous sales and your knowledge of the product and market.

The steps to prepare a budget are the same for you as an individual as they are for a business owner.

The steps you need to take:

  1. Decide on the period of the budget – usually 12 months – It can be from whenever you choose say 1/5/20 or 1/4/20 – it will depend on your year end
  2. Gather all of your income information together
  3. Gather all of your costs information together
  4. Enter the above income and expenditure into your budget on a monthly basis

Check out my free 11-step action plan.

Imagine how it would feel if you could crack your budget now and stick to it throughout 2020. It will help you prepare for life after lockdown and you will be able to hit the floor running. You never know, you may identify some savings or areas where you can boost your income while you go through the process.

Next week I’ll give you tips on how to achieve your financial goals by getting to know yourself better.