Skip to main content
Person's Hand Using Laptop
5 min read

21 Things I Learnt About Budgeting In My First Year Of Business

The first year of any business is more than likely going to be your most difficult. And it’s not until you have the power of hindsight that you will actually realise just how ridiculously hard it was and quite how many blunders you made. Whether it’s printing 1000 business cards and then changing your telephone number or charging way less than you should be, a few slip-ups are an inevitability and all part of the learning curve. 

“If you’re in your first year of business, you’re probably charging a third of what you should.”

Rob Birnie, DBM Motion Graphics

But of course, if you can avoid any mistakes, especially costly ones, your business has a much better chance of surviving. Here a variety of small business owners share their advice for budgeting in your first year of trading and talk about the mistakes that they made so you don’t have to.


Take care of your cash-flow

1. “Sending an invoice is not the same as cash in the bank.” 

Andrew Jarvis, Eximo Marketing

2. “Consider using credit cards for cash-flow ‘insurance’ by buying everything you can on them but don’t spend more than you’re earning. You are just using them in case an invoice gets paid late.”

Stuart Bruce, Stuart Bruce Associates

3. “Clients will normally take longer to pay than they say they will.”

Adrian Ashton, Business Adviser


If you want practical and interactive guidance on budgeting, try AAT’s recently launched short online course: The basics of budgeting


4. “Make sure you do a very detailed cash-flow forecast three to six months in advance showing all projected revenue and costs (guaranteed and potential). Check it daily to see if it balances against what’s in the bank and update your projected revenue and income regularly against your sales pipeline. In my cash-flow spreadsheet, I mark things green when they have come in or gone out and highlight things in red if they are still uncertain.” 

Catherine Dhanjal, TheAnswer Ltd

5. “Be sure to have your payment terms set out with fees for late-payments and send regular reminders. I didn’t and got stung!” 

Lydia Berman, Creative Stripes


Keep your costs low

6. “Keep your costs as low as you possibly can until you can realistically predict your future income.” 

Michael Beer, SEO Consultant

7. “If you need to upgrade on a piece of software (like Canva) see if someone would like to share it with you.” 

Catherine Gladwyn, Delegate VA – Virtual Assistant

8. “Create a list of all of your living and working costs and see which ones you can reduce.” 

Lydia Berman, Creative Stripes

9. “Get a team of other freelancers or self-employed folk together so you can share items, costs and advice. This helped me massively when I started out and still does.” 

Chris Evans, Evans Creative

10. “If you’re not careful when you’re out and about your ‘subsistence’ costs can soar (especially when ‘hot-desking’ in cafes).”

Adrian Ashton, Business Adviser

11. “Meet clients for breakfast meetings or coffee – not lunch, dinner or drinks if you’re picking up the bill.”

Sarah Croft, Recruitment Consultant


Two people meet over coffee

If you want practical and interactive guidance on budgeting, try AAT’s recently launched short online course: The basics of budgeting


12. “At first, I drastically reduced my household budget and expenses (having beans on toast for dinner a lot in the early days) while the client work and bank balance built up.”

Adrian Ashton, Business Adviser

13. “Try out some free networking events to start with. Make genuine connections and the rest will follow!” 

Lydia Berman, Creative Stripes


Plan your spending

14. “Make sure to allow yourself some money to live. I felt guilty about going out and not working and didn’t look after myself.”

Lydia Berman, Creative Stripes

15. “Always move tax and National Insurance money into another account on the same day that you’re paid by a client (and don’t touch it!). No one needs a tax bill panic.” 

Lara Davis, Charity Marketing Communications Consultant

16. “I allow myself around £100pcm for subsistence.” 

Catherine Dhanjal, TheAnswer Ltd


If you want practical and interactive guidance on budgeting, try AAT’s recently launched short online course: The basics of budgeting


17. “Base your budget on what you could afford in your worst month. The investments that you make in the business (like software, office space and staff) can quickly become liabilities if business slows down.”

Michael Beer, SEO Consultant

18. “You don’t need to do everything in year one! Make a wish list and decide what’s a priority. I wasted too much money in my first year thinking I needed to do everything at once. In reality, I spend far less now because I’m more considered with all my decisions. It helps to run ideas and costs past friends or people in your network who can often suggest better or cheaper ideas.” 

Lydia Berman, Creative Stripes


Project your sales 

19. “I managed to predict my income well but I earned it from different areas than I expected so prepare to be flexible. As a VA I had anticipated taking on some personal projects as well as work for businesses but it turned out the demand was mainly from businesses. I’d planned that I could work 40 hours a week and that 50% of those would be spent on marketing and running the business so there were 20 hours left to sell at £25/per hour (my rate when I started out).” 

Caroline Wylie, Virtually Sorted

20. “If I had a six-month contract with a client, I’d mark on my spreadsheet what month we were in and a note at month three to talk to them about their ongoing plans and extending the contract.”

Catherine Dhanjal, TheAnswer Ltd


Need help with budgeting? Buy AAT’s online budgeting course and boost your confidence


Have a backup plan 

21. Having a partner that works full-time always helps. I also already had a zero-hours job in security, which was great for picking up more shifts when business was slow. Personally I feel more secure having multiple sources of income. 

Toks Adebanjo, Virtual Assistant



So there you have it, 21 ways to look after the pennies so that the pounds look after themselves. Cash-flow is king in the world of business and doing your cash-flow forecast should be an absolute priority. Ask someone to help you if you don’t know where to start and then keep a close eye on all your costs, your income and chase those invoices early. Opening a free business bank account is a great place to start to check in on costs.

Or, even better, why not try AAT’s Business Finance Basics? These online bitesize courses cover both budgeting and cash flow

Share this content
Sophie Cross

Sophie Cross is a freelance writer and marketer specialising in business and travel. She is the editor for London Revealed magazine and her clients include Group and Merlin Entertainments.

Leave a Reply

Register with Informi today:

  • Join over 30,000 like-minded business professionals.
  • Create your own personalised account with curated reading lists and checklists.
  • Access exclusive resources including business plans, templates, and tax calculators.
  • Receive the latest business advice and insights from Informi.
  • Join in the discussion through the comments section.