Budgeting for Small Business

Budgeting for Small Business

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By Taz Rajan Bromwich+Smith Staff | 1214 words | Reading Time: 6 minutes and 4 seconds | Date: 2022/10/13

When you support small business, you are supporting a real person.  Supporting local is becoming more and more popular. It is certainly a move in the right direction.  Inherent in the idea that you are supporting an individual or family when you support local businesses, is the fact that as a business owner you as an individual are intimately tied to your business and vice versa.

Here is the thing, if as a person you are not really great with money or haven’t gotten into the habit of working with a budget, that can trickle into your business and pose some extra challenges.  Some people are really great with numbers, budgets and cashflow in their business even though their personal finances are in shambles.  Either way, as a small business owner and as an individual, budgeting is a skill that can bring joy, freedom and become an excellent business tool. 

Simon Sinek’s book Start with Why established the importance of anchoring our activity to our purpose or our why.  We are much more likely to do something we are not good at, do not enjoy or is outside our comfort zone when we anchor it to our why.

Why is budgeting important for small business owners?

Make sound financial decisions. In many ways, your business budget is like a financial GPS.  It helps you evaluate where your business finances currently stand—and what you need to do to hit your financial goals in the future.

Identify where to cut spending or grow revenue. Your business budget can help you identify areas to decrease your spending or increase your revenue, which will increase your profitability in the process.

Qualify for funding to grow your business. If you are planning to apply for a business loan or raise funding from investors, you will need to provide a detailed budget.

Three tips to turn budgeting from a dreaded task to a business building tool

Tip #1:  Tally up all your revenue or income sources.  The first thing you want to be very clear on is your incoming funds.  There may be several sources of revenue and keep in mind, revenue and profit are very different.  You want to have a clear number of all your revenue coming in or expected each month and each year. If your income fluctuates by season or demand, take a 12-month overview then divide the total by 12 to get a monthly figure.  You will want to plan for the peaks and valleys in your income and this exercise will help you with that.  This is incoming money so have some fun here.  Make it a game for yourself or get oversized monopoly money to represent each income source.  Studies show when you are having fun in your business it increases productivity.

Tip #2: Subtract all your fixed and variable costs. There are always two types of expenses in our personal as well as our business lives; those that are the same every month and those that fluctuate.  Paying close attention to costs can help curb unnecessary spending which means more money to grow your business.

Examples of fixed costs:






Debt payments

Examples of variable costs:

Owner’s salary/dividends



Professional development

Tip #3: Pull it all Together.  Add all your revenue and subtract all your costs.  Is your balance a positive number or a negative number?  This is your profit/loss statement.  Not all small businesses are always profitable so if the number is negative you are not alone.  It is the reality which allows you to plan and predict your future.  Maybe get some professional input from an Accountant or Business Finance Coach.  You want to work on a plan to break even and then become profitable.  What does that look like?  Is there some fat you need to trim from your operations?  Is there a way to pivot your business to create new revenue streams?

Click on Free Small Business Budget Template

Hope is a powerful tool in every entrepreneur’s tool belt and entrepreneurs are some of the most resilient Canadians.  Hope is a great thing and something you want to keep alive.  You also want to take a good, objective, and realistic look at your business budget and make decisions that are best for the long term.

You may discover with this exercise that your business is drowning in debt and your debt payments are keeping you from running a profitable business.  If that is you, know that you are not alone.  All small business owners face financial challenges so this is normal.  Now take a good, hard look at your business plan and your potential revenue to come.  Can your business thrive in 12-18 months? Can you realistically pay off the business debts so there is more profit?  If not, it may be time to seek some professional assistance. 

It can seem daunting and a bit scary.  The debts are piling up and the profits are shrinking but what do we do? If I deal with the debts in a formal way will I ever be able to run a business again? Will I ever qualify for credit in the future?  Will it ruin me for the next 7 years?  I am the director of my business, I can’t declare bankruptcy.

These questions and comments are common for small business owners.  There certainly is hope, you definitely can open another business and you will qualify for credit in the future.  Filing a Consumer Proposal is the best alternative for a director of a company. Where do you start? 

Business is a thing but also an activity.  As a corporate entity, you are personally not liable except for certain things like Environmental issues, if you are a director then source deductions and GST are considered deemed trust and will fall on the shoulders of the director.

If you have personally guaranteed or co-signed for your business loans, you are personally responsible so even if the business declares bankruptcy, you may personally still be on the hook.

Most likely as a small business, although you went to the bank for help with business, it is extremely likely the loan is in your name, personally as well, so if you’re business restructures, you are personally still responsible. 

How do you know what effects only your business and what impacts you personally?  The very best thing you can do when you look at your budget and the future is not looking too bright is get professional insight.  Insight is just that.  It is perspective, it is recommendations, it is figuring out your options and then, when you are ready, making the most informed decision.  Your consultation should not be filled with pressure to sign something or pay a fee up front.  It should be a very real, raw discussion about your numbers with a licensed professional who is an expert in the field.

The goal with the budget is to set your business and yourself up for success.  Sometimes, that success comes in the form of restructuring past debts so that you can move onwards and upwards.

When it comes to debt help, your federally legislated Licensed Insolvency Trustees are the experts.  Have the conversation, learn your rights and options.  Do not sign anything on the spot or pay up front fees.  

If you are interested to learn more check out this CTV segment about Joy in Budgeting.

 Bromwich+Smith’s Debt Relief Specialists are available for initial free and confidential consultation by phone at 1-855-884-9243 or request a call back at contact us page.


By Taz Rajan Community Engagement Partner at Bromwich+Smith
Taz has been in the finance industry for nearly 2 decades and has always been passionate about education and empowerment.  Having declared bankruptcy herself, she intimately understands the shame, stigma surrounding matters of debt as well as the joy and relief that comes from restructuring.  Taz actively works to normalize the conversation of debt through blogs, media interviews, webinars, lunch & learns and through building relationship.


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