Key takeaways
- Start from realistic sales estimates based on past months.
- List every fixed and variable cost, including statutory deductions.
- Add a contingency for surprises.
- Compare budget against actual results every month.
In this guide
A budget is your financial plan for the year. Learning how to create a business budget helps you control costs, price correctly and avoid cash shortages. Download our free Excel business budget template and follow these steps.
Step 1: Review past performance
Look at the last 6 to 12 months of sales and expenses from your financial statements, M-Pesa statements and bank records.
Step 2: Forecast sales
Estimate monthly income for each product or service. Factor in seasons such as school terms, December holidays and January slowdowns.
Step 3: Estimate cost of sales
Work out the direct cost of what you sell as a percentage of sales.
Step 4: List operating expenses
- Fixed: rent, salaries, insurance, software subscriptions.
- Variable: fuel, packaging, bank and M-Pesa charges.
- Statutory: NSSF, SHIF, housing levy, licences and permits.
Step 5: Add a contingency
Set aside 5 to 10 percent for unexpected costs.
Step 6: Project cash flow
Track opening and closing cash each month so you know when you may need financing.
Step 7: Compare budget vs actual
Every month, compare results to the budget and adjust. The template’s Budget vs Actual sheet does this for you.
Download the free budget template (Excel)
Want budgets that update automatically from your sales? Our POS and custom software do the hard work.
Download the free Excel budget template
Our template includes a visual dashboard with charts, an assumptions sheet, a 12-month budget with automatic totals, net profit and cash balance, and a month-by-month budget vs actual tracker. Change the blue cells and everything updates.
Frequently asked questions
Is the budget template free?
Yes. Download it, edit it in Excel or Google Sheets and use it for your business.
How far ahead should I budget?
Prepare a 12-month budget and review it monthly.
What is a contingency?
A small percentage set aside for unexpected costs, usually 5 to 10 percent of expenses.
A Nairobi IT company helping Kenyan businesses grow with websites, software, marketing, networking and security. Our guides are written from real client projects.
