5 Steps for Budgeting for your Small Business

Budgeting isn't always easy, especially when you're dealing with keeping a business alive, or enough food on the table. Growing up in a household where money was a constant topic of conversation in order to save for the things we wanted and needed helped shape my ideas about budgeting today.

When it came to my business, that was a whole other story! I had to rethink a lot of needs vs. wants and decide how exactly I wanted my business to grow as I made more money. Here's 5 steps I wish I had known when I first started my small business!


Planning ahead before you start making money is key to budgeting for your small business. Once you starting making money for the goods you have sold, it becomes much more difficult to decide what to do with it.

Before you have to make that decision, plan ahead so you know just what to do! Most importantly, by planning your budgetary goals (short term, medium and long term), you'll be able to realistically decide how you would like to spend all that dough you'll be making once you get there 5 years from now.


Start by deciding how you need your money allocated so that your business can keep producing for the year to come. I do that by writing down exactly my needs to keep my business running, and then breaking down percentages until everything I need has a percentage going towards it. For example, I break my budget down like this:

  • Paying myself (20%)
  • Cost for convention booths (30%)
  • Cost of travel/food/lodging (10%)
  • Cost for materials to make my products (20%)
  • Annual costs (ie. annual taxes, web subscriptions, ect.) (10%)
  • Extra costs (ie. classes to help with the business, paying for helpers, ect.) (10%)

Which adds up to 100% of the money I've earned. That isn't exactly how I break down my costs, but it's a good example.

By breaking down these costs, I am able to physically see what I need to save for, and how much I am able to spend on certain categories. For example, I know that the cost for convention booths is high, but I always make that money back. So I reason out that I should afford any opportunity I have to booth, and get an idea of the amount of money I'll need in a year by taking the:

(average cost of a booth) x (average number of booths I buy a year)

and that's my budgetary goal for that category. So if I need an average of $2,500 for boothing at conventions in a year, I'll need to make at least $8,333. In other words, 30% of $8,333 is roughly $2,500.

Of course, things change and sometimes I have more money (or less!) than I need because the percentage isn't always perfect. If that is the case, I look at my list and either decide to save that money or spend it elsewhere as needed, or if I'm running short, possibly take it from another category. And if you'd like to learn more about boothing at a convention, I have a post on that too!

 You'll need money for convention booths...

 You'll need money for convention booths...

...and money for marketing your brand!

...and money for marketing your brand!


More important than anything else when running a business is to stay consistent. That includes both in your budgetary habits, and with everything else in your business too! Keep your head up, and always be mindful of staying consistent with your money. This can be done by doing either a weekly or monthly breakdown of costs and profit.

I also suggest opening a separate checking account, as it helps me keep tabs on what is going out and coming in. Make sure that your accounts that bring in money (like paypal, etsy, ect.) are connected to this checking account, so the money you make and spend doesn't mix with your personal funds. That will save you a huge headache when you're filing taxes at the end of the year and need to report your profit and losses. If they're all in one place, it is hundreds of times easier to keep track!

By holding yourself accountable and staying consistent with your budget, you will be able to clearly keep track of your habits, and you may even be able to adjust your budget as needed as you see how much to spend in what places.


This is a big one! And of course it is, because if you make a budget and break it, you've defeated the point of the budget in the first place! Going back to the percentages mentioned in #2, another way to look at the budget is:

If I make $100 then,

  • $20 goes to paying myself (20%)
  • $30 goes to convention booths (30%)
  • $10 goes to traveling/food/lodging (10%)
  • $20 goes to my materials (20%)
  • $10 to my annual costs (10%)
  • $10 to extra costs (10%)

If I know how much money I have in each category, I am able to be sure to not overspend. That means that I need to keep myself accountable to my budget by being consistent as I mentioned above, and being aware. If I don't think I have the money, I shouldn't spend it until I know.

This can be really difficult for me when it comes to materials! I love buying fabric more than anything else, and sometimes I can go overboard. So when I go to a store to buy materials, I make a list of exactly what I need (color, size, ect.) and bring just a little extra cash in case I find something I must have. That way, I don't feel too constricted, but I am able to control where I spend, and where I save.

 Materials just so fun to buy!...

 Materials just so fun to buy!...

...But you have to keep you budget in mind!

...But you have to keep you budget in mind!



So no matter if you've been at this for years, or this is your first time, never forget that budgeting is not an exact science. Things come up, and that's life sometimes!

For example, I was attending a convention upstate and got towed on the last morning of a convention. What that meant for me was: I needed to pay $400 dollars to get my car back, and I would be losing any other possible sales while I was gone dealing with my car.

That money had to come from somewhere, and it was up to me to decide from where. Things happen, costs go up (or down sometimes) and you have to learn to adjust. If you keep a close eye on your budget, and keep up with it every week or month, you'll be able to see where you spend more or less and where a shift needs to come into play.

Maybe you don't attend many conventions, but you have $600 extra to spend on a booth this year. Well, maybe instead you can use that money for more prints or materials, or save it for a rainy day when you car gets towed (ouch!). Shifting that percentage as needed will help you fine tune where your money goes, and helps insure you're always in the green!

Good luck, and I hope this helped. If you have an questions or comments, leave them below! I'd love to know how you budget your money!