Seasonal Budgeting for Small Businesses (2024)

Seasonal Budgeting for Small Businesses (1)

Just as the weather turns crisp and the trees shed their leaves, small businesses face changing seasons. You will need to anticipate these changes and start budgeting for seasonal trends.

Seasonal budgeting is an unfortunate necessity as a small business owner. Not only do you need to anticipate the tides of customer demand, but you also have to maintain your costs. Having highs and lows during the running of a business is normal – what really matters is how you prepare to face them.

The biggest secret when it comes to preparing for low points in businesses is refining your budget. Small business financing can help you offset the lows and take advantage of the highs during your seasonal changes—but first you need to know when to expect them.

Let’s look at things to consider when creating your seasonal budget:

Plan for Your Business Lows

In order to create an accurate seasonal budget, take a look at your sales data and cash flow trends to fine business lows.

Once you know when to expect your business lows, start planning how to cut costs or generate extra cash so that you’re covered during those periods. You don’t have to panic – merely strategize about how to spend when periods are slow.

You may want to create a list of expenses that you have to meet to keep your business up and running. This list may include costs such as:

  • Rent
  • Taxes
  • Utilities
  • Inventory
  • Technology
  • Marketing costs
  • Payroll
  • Insurance

Spreadsheets and statements are okay, but it’s time consuming to track and forecast manually. It also leaves room for human error. Track your historical trends digitally and automatically. This data combined with your budget will allow you to prepare for healthy finances during slow periods.

Budget Cuts During the Off Season

Now that you know when your business lows are, you can start making some cuts to your budget. The goal here is to save as much money as possible so that you can reinvest it back into your business during the high season.

Here are a few ways you can cut costs during your off season:

  • Reduce inventory levels – During your off season, you may not need to order as much inventory. This could help you save on storage costs or maintain a healthy cash balance..
  • Cut back on staff hours – If you have part-time or seasonal employees, this is the time to cut their hours back. If there isn’t as much demand, you don’t need as many workers.
  • Reduce marketing spend – Take this advice with a grain of salt. If your sales cycles are long, it may not apply. But if marketing investment is tied to immediate revenue, it’s worth making adjustments. For example, as cold weather approaches, it may not be the time for golf course or vacation rental ads. Instead, focus on more cost-effective, evergreen methods like content marketing.
  • Review your fixed and variable costs – Make sure you know what expenses are necessary and which ones can be cut back on, if needed.

The down time could also be a good time for remodels or other add ons that could increase your sales later on. Don’t make drastic cuts without weighing your outcomes. If there are constant expenses that you need to maintain, position yourself in advance for small business loans that can help cover some down time costs.

By making strategic cuts to your budget during the off season, you’ll be able to reinvest that money back into your business when things pick back up.

Plan for Your Business Highs

As much as all small business owners dread the lows, the highs come with their own challenges. While they’re certainly more fun, they’re also busier and potentially more expensive.

The best way to prepare for your highs is to save during your lows. Cash flow can still be an issue when business is booming due to upfront labor and inventory costs. By saving during the slower times, you’ll be able to afford the increased expenses associated with your business highs.

When preparing for the highs, you can plan a list of typical business expenses that you will have to cover before the sales boom. All of these things cost money, so it’s important to have a plan in place for when demand is high. You can also take into account what expenses you will have to make during those booming months.

This list can include expenses for a business such as:

  • Inventory
  • Additional staff
  • Overtime pay
  • Marketing campaigns
  • Extra shipping costs
  • Stocking Shelves
  • Replacing Equipment
  • Supply Purchases
  • Gifts and Benefits for Employees
  • Extra Payroll
  • Any Promotions or Discounts

You should also have a plan for what you will do with the extra revenue. Will you reinvest it back into your business? Save it for a rainy day? Use it to pay off debt? Knowing how you’ll use the extra money will help you make the most of your business highs. This will help you keep your business afloat during the slow times and take advantage of the busy times.

Seasonal Budgeting for Small Businesses (2)

Small Business Financing Options

Assuming there is enough cash to cover your expenses and an increased amount coming in, these tips work great. Of course, that is not always the case, especially with small businesses. Investigate the most advantageous small business financing options for your business in advance so you’re positioned to secure favorable terms and interest rates. Here are some starter options for financing your seasonal budget.

Term Loans

A term loan is a lump sum of cash that you borrow and repay over a set period of time with fixed payments. The repayment schedule is determined when you take out the loan, so you’ll know exactly how much you need to pay each month. This type of loan can be used for a variety of purposes, including seasonal inventory costs, hiring additional staff, or marketing campaigns.

Term loans create some of the lowest interest rates. It also incorporates flexible repayment terms. Term loans can be your best friend if your business does not need immediate cash and has good credit.

Invoice Factoring

Invoice factoring refers to a variant of financing that lets you sell your unpaid invoices to a lender. You will receive cash in kind. After this, the lender will collect payment from your customer and you will then repay the loan, along with other fees and interest.

If you have customers who take a long while to pay their invoices, this type of financing is helpful. By selling your invoices, you can get the cash you need right away without having to wait for your customers to pay.

Factoring can help your company when it has a lot of longer term outstanding invoices. Be careful to weigh these benefits with the impact on your customer relationships.

Invoice Financing

Invoice financing is similar to invoice factoring, but instead of selling your invoices, you use them as collateral for a loan. The lender will give you a loan based on the value of your invoices and you’ll repay the loan, plus interest and fees, when your customers pay their invoices.

If your business has a lot of receivables, credit-worthy customers, and need cash immediately for operating expenses or growth opportunities, this type of financing could be your match. Explore invoice financing for small businesses especially if you cannot wait for other forms of financing.

Revolving Line of Credit

A revolving line of credit is a type of loan that allows you to borrow and repay funds as needed. You will be granted a credit limit and will be able to borrow up to the stipulated amount. Repaying the borrowing funds will make them available to you again.

This type of financing can be helpful if you have unpredictable or seasonal expenses. You can borrow the cash you need when you need it and repay it when your business is doing well.

One thing to keep in mind with a revolving line of credit is that it typically has higher interest rates than other types of loans. But, if you have good credit, you may be able to qualify for a lower rate.

Merchant Cash Advance

A merchant cash advance is a type of financing that allows you to sell a portion of your future credit card sales in exchange for cash. The lender will then collect a percentage of your credit card sales until the loan is repaid.

This type of financing can be helpful if you have a lot of credit card sales. By selling a portion of your future sales, you can get the cash you need right away.

Be careful— merchant cash advance loans follow an annual percentage rate that can go beyond what you would be paying if you selected another option. Make sure you’ve been operating over six months and have a good credit score before selecting this option.

Extra Tips for your Seasonal Budget

Know your historical sales patterns – This is key in forecasting what to expect in the future and will help you plan inventory, staff, and marketing efforts accordingly.

  1. Know your historical sales patterns – This is key in forecasting what to expect in the future and will help you plan inventory, staff, and marketing efforts accordingly.
  2. Look at industry trends – Keeping tabs on what’s going on in your industry will give you a good idea of what to expect seasonally. For example, if you sell products that are popular gifts, you know to expect a spike in sales during the holidays.
  3. Plan for the unexpected – As much as you plan and prepare, there will always be things that come up that you didn’t plan for. Make sure to have a buffer in your budget for these types of things. Stay flexible!
  4. Plan for big events – If there are any big events happening in your industry or community (think trade shows, conventions, etc.), be sure to factor those into your budget as well!
  5. Plan for changes in customer demand. Just because last year was slow doesn’t mean this year will be the same. Be prepared for both ups and downs.

By following these tips, you’ll be on your way to creating a strong seasonal budget for your small business! If you need help, our team at Viably is here for you! Sign up today!

Seasonal budgeting can be a challenge, but it’s important to be prepared for the ups and downs of running a small business. By knowing when your business’ lows and highs are, you can make strategic decisions about how to spend your money.

Happy budgeting!!

Seasonal Budgeting for Small Businesses (3)

Seasonal Budgeting for Small Businesses (2024)


What is the best budgeting method for small business? ›

The most commonly used business budgeting methods are:
  • Incremental budgeting.
  • Activity-based budgeting.
  • Zero-based budgeting.
  • Value proposition budgeting.
  • Envelope budgeting.
Apr 21, 2022

What is the best way to create a budget answers? ›

How to Make a Budget in 5 Steps
  1. Step 1: List Your Income. ...
  2. Step 2: List Your Expenses. ...
  3. Step 3: Subtract Expenses From Income. ...
  4. Step 4: Track Your Expenses (All Month Long) ...
  5. Step 5: Make a New Budget Before the Month Begins.

What are the 3 types of business budgets? ›

Different types of budgets
  • Master budget. A master budget is an aggregation of lower-level budgets created by the different functional areas in an organization. ...
  • Operating budget. ...
  • Cash budget. ...
  • Financial budget. ...
  • Labor budget. ...
  • Static budget.

How do I create a small business budget spreadsheet? ›

How to create a budget for a business
  1. Calculate all forms of income. ...
  2. Subtract your fixed expenses. ...
  3. Subtract your variable expenses. ...
  4. Prepare for emergency and one-time expenses. ...
  5. Create a profit and loss statement. ...
  6. Draft your business budget.
Jan 7, 2022

What are the four 4 main types of budgeting methods? ›

Types of budgeting methods
  • Activity-based budgeting. Activity-based budgeting records and tracks all costs related to the business. ...
  • Incremental budgeting. Incremental budgeting is a process where a budget is created by iterating on the budget used in the year prior. ...
  • Value proposition budgeting.
Oct 27, 2022

What is the simplest budgeting method? ›

1. Zero-based budget. The concept of a zero-based budgeting method is simple: Income minus expenses equals zero. This budgeting method is best for people who have a set income each month or at least can reasonably estimate their monthly income.

What are the 7 steps in good budgeting? ›

Follow these seven steps to start a personal budget that can help you reach your financial goals:
  • Calculate your income. ...
  • Make lists of your expenses. ...
  • Set realistic goals. ...
  • Choose a budgeting strategy. ...
  • Adjust your habits. ...
  • Automate your savings and bills. ...
  • Track your progress.
Oct 11, 2022

What is the most successful way to budget? ›

We recommend the popular 50/30/20 budget to maximize your money. In it, you spend roughly 50% of your after-tax dollars on necessities, no more than 30% on wants, and at least 20% on savings and debt repayment.

What is the 50 30 20 budget rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.

What are 5 characteristics of a successful budget? ›

The main features of a successful budget are:
  • It should be well-planned and practical. ...
  • It should have flexibility. ...
  • It should be inspiring and motivating. ...
  • It must reflect a sense of ownership. ...
  • It should be Coordinated. ...
  • It should have a great representation. ...
  • It should track the spending. ...
  • It should be flexible.

What are the 4 main components of a business budget? ›

Budgeting is a key activity for small businesses. The primary components of a budget are sales revenue, fixed costs, variable costs and profit.

What are the 3 most important parts of budgeting? ›

For any organization, a budget, whether done annually or conducted throughout the year in the form of rolling forecasts, is a critical component for success. Any successful budget must connect three major elements – people, data and process.

What is a business budget template? ›

A business budget is a spending plan that estimates the revenue and expenses of a business for a period of time, typically monthly, quarterly, or yearly. The business budget follows a set template, which you can fill in with estimated revenues, plus any recurring or expected business expenses.

What is the spreadsheet formula for budgeting? ›

Insert a graph

To do this, add a column to the right of your spreadsheet and call it 'Percentage'. Then, add the formula '=SUM(expense/total expenses)'. For example, if you are working with your marketing budget at first, your formula might be '=SUM(E4/E10)'.

What is a budget template? ›

A budget template is a customizable worksheet that can help you manage your budget by keeping track of all your living expenses. A budget template is an easy way to calculate your finances to see if you're on track with your spending.

What are the 4 C's of budgeting? ›

Four Cs—continuity, correctness, conservatism and crowding-in—are the hallmarks of the Union budget for 2022-23 presented by India's finance minister on 1 February.

What are the 7 types of budgeting? ›

The 7 different types of budgeting used by companies are strategic plan budget, cash budget, master budget, labor budget, capital budget, financial budget, operating budget.

What are 5 budgeting methods? ›

Incremental, zero-based , activity-based , participative , negotiated , and value proposition are different methods of budgeting.

What is the #1 rule of budgeting? ›

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

What is the golden rule of budgeting? ›

The golden rule of government spending is a fiscal policy that a government should borrow only to invest, not to fund current spending. In other words, the government should borrow money only to make investments that will produce long-term benefits for the future.

What are the three 3 common budgeting mistakes to avoid? ›

Listed below are 10 common budget mistakes to avoid and easy ways to fix them.
  • Not writing your budget down. ...
  • Not tracking your spending. ...
  • Setting unrealistic budgeting goals. ...
  • Forgetting to track one-time expenses. ...
  • Not planning for emergency expenses. ...
  • Forgetting to plan for fun expenses.
Dec 15, 2022

What is the 70 rule in budgeting? ›

The 70/20/10 budget rule is a money management strategy you can use to dictate where you want your income to go. It involves separating your take-home pay into three buckets and dividing each into the following percentages: Seventy percent for monthly bills and daily spending.

What are examples of seasonal expenses? ›

Examples of Seasonal Expenses
  • Property taxes. Everyone who owns a vehicle or home pays property taxes. ...
  • School costs. From tuition to supplies, if you or a family member attends school, these costs will need to be factored into your seasonal expenses.
  • Home maintenance. ...
  • Vehicle maintenance. ...
  • Holidays.
Dec 30, 2021

What are the 4 characteristics of a successful budget? ›

To be successful, a budget must be Well-Planned, Flexible, Realistic, and Clearly Communicated.

What is a key priority when budgeting? ›

Remember, retirement, credit card payments, and emergency savings should be your top financial priorities.

What is the most crucial part of making a budget? ›

The key to creating a successful budget is to add up all of your revenue sources over a 12-month period, forecast your expenses to estimate your profit (the difference between your revenue and costs), and frequently review your budget through monitoring monthly.

Why do most budgets fail? ›

Oftentimes the answer to the question of why do business budgets fail is because these budgets have unrealistic targets. For example, your business could have an unrealistic expense reduction target, causing you to underestimate your expenses. It's difficult to meet budgets with unrealistic goals.

What is the 50 15 5 rule? ›

50 - Consider allocating no more than 50 percent of take-home pay to essential expenses. 15 - Try to save 15 percent of pretax income (including employer contributions) for retirement. 5 - Save for the unexpected by keeping 5 percent of take-home pay in short-term savings for unplanned expenses.

What is the 75 15 10 rule? ›

Simplify Budgeting – The 75/15/10 Rule

75% of your income goes to expenses. 15% goes to investing. 10% goes to saving — that is, again, until you reach the 6-months worth of expenses threshold.

What 3 things should a good budget include? ›

What monthly expenses should I include in a budget?
  • Housing. Whether you own your own home or pay rent, the cost of housing is likely your biggest monthly expense. ...
  • Utilities. ...
  • Vehicles and transportation costs. ...
  • Gas. ...
  • Groceries, toiletries and other essential items. ...
  • Internet, cable and streaming services. ...
  • Cellphone. ...
  • Debt payments.
Sep 26, 2022

What are the six 6 principles of budgeting? ›

The principles in question are those of unity, universality, annuality and specification — seen as the four main traditional budgetary principles — plus the principles of equilibrium, unit of account, budget accuracy, sound financial management and transparency.

What does a good budget look like? ›

The basic rule of thumb is to divide your monthly after-tax income into three spending categories: 50% for needs, 30% for wants and 20% for savings or paying off debt. By regularly keeping your expenses balanced across these main spending areas, you can put your money to work more efficiently.

What is not a good budgeting strategy? ›

Answer and Explanation: The correct answer is option b. pay with a credit card if you have a hard time sticking to a budget.

How do you prepare a monthly budget for a company? ›

How to create a business budget in 6 steps
  1. Examine your revenue. ...
  2. Subtract fixed costs. ...
  3. Subtract variable expenses. ...
  4. Set aside a contingency fund for unexpected costs. ...
  5. Determine your profit. ...
  6. Finalize your business budget.
May 23, 2023

What percentage of business income should be spent on expenses? ›

The Profit First system highlights that business expenses should be no more than 30% of total revenue. He suggests that this strategy will ensure profitability and if there isn't enough leftover after profit and compensation to cover expenses, then expenses should be cut.

What are the three pillars of budgeting? ›

There are three main areas in your budget that should be automated: your income deposits, your bills, and your main financial goal.

How do I create a simple budget template? ›

How to create a budget spreadsheet
  1. Choose a spreadsheet program or template.
  2. Create categories for income and expense items.
  3. Set your budget period (weekly, monthly, etc.).
  4. Enter your numbers and use simple formulas to streamline calculations.
  5. Consider visual aids and other features.

Does Excel have a business budget template? ›

Thankfully, many free Excel business budget templates are available that make it easy to set up your own budget. These templates provide an easy-to-follow format that allows you to quickly input your income and expenses so you can get started right away.

Does QuickBooks have a budgeting tool? ›

Learn how to use your data to create budgets and forecasts. QuickBooks Desktop has budgeting and forecasting tools to help you plan and make smart business decisions.

What are the 5 steps in preparing a budget worksheet? ›

How to create a budget
  • Calculate your net income.
  • List monthly expenses.
  • Label fixed and variable expenses.
  • Determine average monthly costs for each expense.
  • Make adjustments.

How do you complete a budget worksheet? ›

How to create a budget worksheet
  1. Create the worksheet. Whether you're using a notebook or software program for your worksheet, create your budget to have multiple rows for each item you want to include. ...
  2. List the metrics you want to track. ...
  3. Include budgeted estimates. ...
  4. Track your actual numbers. ...
  5. Update your budget regularly.
Aug 8, 2022

Is Excel best for budgeting? ›

Most corporations, including government organizations, businesses, and non-profits, use Microsoft Excel for their budgeting. Excel offers them flexibility, familiarity, and ease of compiling, sorting, managing, and analyzing data for budgeting and forecasting.

What is the most common budget format? ›

Line-Item Budgeting

The line-item budget, which is the most widely used of all budgeting systems, offers many advantages. It is comparatively easy to prepare and doesn't require sophisticated financial skills.

What are the 3 steps to creating a budget? ›

Here's how to create a budget that works for you:
  1. Track your income. The first step is to identify your monthly income. ...
  2. Track your expenses. ...
  3. Balance your budget.
May 25, 2023

Which budgeting strategy is most effective? ›

Proportional budgeting

One of the most popular ways to proportionally budget is to split your after-tax income up into three categories: 50% for needs, 30% for wants and 20% for savings and paying off debt. Proportional budgeting allows you to be flexible with your budget.

What is the 1 3 rule for budget? ›

The judge of CNBC's “Money Court” tells CNBC Make It that renters and buyers alike need to follow the 1/3 rule, which calls for a third of your after-tax income to go toward living expenses, a third toward your home and the last third toward savings and investments.

What is the most effective budgeting? ›

We recommend the popular 50/30/20 budget to maximize your money. In it, you spend roughly 50% of your after-tax dollars on necessities, no more than 30% on wants, and at least 20% on savings and debt repayment.

What are the four rules for successful budgeting? ›

It works because it's built around Four Rules designed to change your financial future.
  • Rule One. Give Every Dollar a Job.
  • Rule Two. Embrace Your True Expenses.
  • Rule Three. Roll With the Punches.
  • Rule Four. Age Your Money.

What are the 3 key components of successful budgeting? ›

To be successful, a budget must be Well-Planned, Flexible, Realistic, and Clearly Communicated.

What are the 3 essentials of effective budgeting? ›

For any organization, a budget, whether done annually or conducted throughout the year in the form of rolling forecasts, is a critical component for success. Any successful budget must connect three major elements – people, data and process.

What is the 50 20 20 rule? ›

The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.

What is the 70 20 20 rule? ›

The 70-20-10 rule holds that: 70 percent of your after-tax income should go toward basic monthly expenses like housing, utilities, food, transportation, and personal living expenses; 20 percent should be saved or put into investments, leaving 10 percent for debt repayment.

What is the budget 50% rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

What is the hardest part of budgeting? ›

The hardest part of budgeting for most people is unexpected expenses. These may be unexpected, and sometimes unpleasant, but you can still plan for them. If you have a car, plan to have it repaired. The unknowns are when that will be and how much it will cost.


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