How do I make a budget for next year? A guide for small business

Do you write up accurate budgets each year? If not, you might be missing out.

A whopping 99% of surveyed business owners have personally watched inaccurate forecast-based decisions create negative consequences for their business, with a little under half that number saying they felt they lost out on business opportunities, while 50% experienced delayed deliverables.

The data is clear – accurate budgets can help you meet deadlines, capitalise on exciting business opportunities, and improve the productivity of your team. But how do you make a budget as a small business?

How to make your 2025 budget as a small business

Spreadsheets don’t have to be a burden, in fact, budgeting season can be a lot of fun if you know what you’re doing going in. So, crack out the calculator, here’s how to make a budget.

Reflect on your past expenditure

Take a look at your 2024 bank statements, accounting tools, and profit and loss calculations. These will help you understand patterns in your spending as well as helping you forecast income. The breakdowns of these costs will also provide a helpful template for the future – take a close look at how your accounting tool (or accountant) has categorised your past costs, use these categories for future costs for ease.

Create your spreadsheet template and ‘brain dump’ document

It’s easy for budgeting to get overwhelming – once we start thinking about income and expenses, our minds immediately begin to think of more. If we don’t have somewhere to write these thoughts down, because there’s no coordinated entry area, these thoughts can quickly spiral until we shut down.

Create two documents. One can just be a word document, or a page in a notebook. This is where you’ll write down any expenses or income as you think of them. Keep this document close as you work, so you can jot down any other costs or sales as working jogs your memory.

The other document should be a spreadsheet, this will be your official budget. At the top, put each month of the year in its own horizontal column. On the left, insert the different categories of expenses that you see from your 2024 documents, along with a column for income.

Add your costs into your ‘brain dump’ document as you think of them, then add them under their correct categorised column in your spreadsheet.

Forecast your revenue

Forecasting revenue can be a scary part of the process. It can be hard to wonder which clients will stay, and which may leave. But remember, having a strong budget can actually help you close more business by giving you the financial clarity to pursue new opportunities and make informed decisions.

Again, look at your 2024 figures – those are your best starting place. Consider whether they may go up or down. Are there any market trends you can foresee that will impact them? Is a competitor launching a new product or service in a given month that could impact your sales? How do seasonal dates, like Black Friday and the Christmas shopping season, impact sales? Are you planning a big outreach push or experiential marketing campaign that will increase your revenue?

Don’t just look at current clients and consider if they will stay another year. Also consider your ability to sign new business. How many clients do you usually sign per year? How often do you grow your customer base? If you’ve grown your customer base by 10% per year for the last 5 years, or you’ve signed 3 new clients every year, and lost one, this indicates a pattern for you. You should consider including this pattern in your forecast, unless you can think of a good reason the same pattern won’t continue into 2025.

Run your calculations

Use AutoSum (this button: Σ in your spreadsheet) or a calculator to calculate your total costs per month and total income per month. Then, subtract your costs from your income.

Into your income, add in any profits that will stay in the business as we move from 2024 into 2025. Finally, calculate the total predicted income, costs, and difference for the year.

Is the number positive for every month? Great, now you just have to stick to the budget and meet your income predictions.

Is the number in the negative? It’s time to consider cutting some costs or attracting more business.

Track your actuals

Budgeting doesn’t end there. Create a secondary document, another spreadsheet with the same template you made before, but this one will be used to track your actual income and costs as they happen.

As we move through 2025, take the time at the end of each month to insert your actual costs and compare the costs to your original budget. If you are overexerting your budget, it’s good to be able to see that before costs spiral and you run out of working capital.

Find a business loan with Funding Options by Tide

Are you looking for business finance to help boost your 2025 growth strategy? We’re Funding Options by Tide, we help connect eligible borrowers to our network of over 120 lenders offering between £1,000 and £20M. Just click the link below and let us know what you’re looking for and we’ll be in touch to let you know if you’re eligible for finance.

Find a business loan.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.