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8 Tips For Budgeting During Times Of Uncertainty

Budgeting during times of uncertainty is not an easy feat. With so many unknowns at the moment, it is difficult to accurately forecast costs and income for the next three months, let alone 12. However, it is possible – and hopefully these helpful pointers can provide some reassurance.

Here are our top ten tips on budgeting in these uncertain times:


1. Think about your personal finances

First of all, as a business owner, if you are worried about your business cash position, the first thing you need to look at is your own personal finances. By creating a personal spending plan, you can potentially find ways to reduce your required income from the business, thus causing less pressure on the business. I delivered a webinar, ‘Your Personal Budget’ back in 2020 which covers this topic in more detail. You can catch the recording below: 


2. Ensure your data is clean and tidy

Creating an effective budget starts with having worthy data. If you are using accounting software, make sure there are no items waiting to be categorised, all outstanding sales invoices are indeed outstanding, and check you haven’t got duplicate purchases. Check your bank balance on the software matches your bank account balance. 



3. Create a headline business budget

Once these first two steps are complete, you can create a headline business budget. We recommend looking at your balance sheet first. This concerns the assets and liabilities of the business:

  • Are there opportunities to refinance any of your debts?
  • Can you bring in overdue funds from customers?
  • Can you renegotiate payment terms with your suppliers?
  • In addition, are there assets that your business needs in this uncertain time to add an additional income stream? How will these be funded? Could they be funded through asset financing?

If additional finance needs to be obtained, ensure this is considered. Once you have this figure, enter it in above your drawings. Add this figure to your drawings figure and enter the total above.

This is your required Net Profit After Tax. Add in the tax (which will be different depending on whether you are a limited company or a sole trader), and you have your Net Profit Before Tax.


4. Look at your overheads

After this you will need to examine your overheads.

  • Are there subscriptions, software or services that are being paid for but not fully utilised?
  • Can you downgrade a subscription temporarily?
  • Do you really need that software?
  • Can you change a service to an ad hoc one rather than a monthly retainer?
  • Can you renegotiate a service or fee with any of your suppliers?

Do not forget to look at utility and insurance comparison sites and check to see whether you can get a better deal elsewhere. If you are refinancing, or taking on new debt, do not forget to include your interest payments here as well. Once you have your total overheads, add those figures into your budget (you can either list them in categories, or just put ‘overheads’ – this will depend on the size and complexity of your business. Add your overheads figure to your net profit before tax figure, and you will arrive at your Gross Profit.


5. Calculate your required sales

Many industries will have an average Gross Profit margin that businesses work towards, but your business may be different. If you know what a reasonable margin would be, you can easily calculate the required sales. If you have a target GP% that you are working towards, use that. If you have never looked at it before, you may need to look at historical data to see what average percentages your business works with.

To calculate this figure, you will need to look at the costs that directly relate to your sales – this may be staff (both employed and outsourced), software, products, materials and so on. This is really the most important step in your budget:

  • Are the sales that are required reasonable?
  • Given current performance, changes to customer purchase behaviour, and potential disruptions to the business, are these achievable?

If not, you may need to further reduce your outgoings, adapt the business to increase revenue, or obtain finance to fill a temporary cashflow gap. Once you have this annual budget, you may wish to divide it by 4, 12, or 52, depending on whether you want a quarterly, monthly, or weekly budget.


6. Create a cash flow forecast

We also recommend creating a cash flow forecast – this may be on a basic spreadsheet, or you may instead choose to opt for some software. Futrli Predict is designed for small businesses using Xero to easily look at their future cash position and may be quicker and easier if you want to hit the ground running.


7. Keep checking your budgets

Once you are happy with your budget and forecast, the most important action to take is to USE them. We recommend picking 3-5 Key Performance Indicators (KPIs, or key drivers in your business) to monitor. Reviewing these at least monthly is crucial to ensuring your budget and forecast remain relevant and useful. You can use a resource such as to find some common KPIs for your business if you are not sure where to start.


8. Consider all possiblities

Finally, you need to ensure you have looked at any potential challenges that your business may come up against. List every eventuality from minor to major, and look at the consequences, and how you can reduce the impact of these consequences on the business. This risk register will enable you to be prepared should any of the challenges arise.



It important in these times to not make drastic decisions, and it may be that any rapid growth decisions need to be put on hold. The focus should be on maintaining profit margins, ensuring money continues to flow into the business, bills and liabilities can be covered, and you can pay yourself the required amount to keep you afloat personally.

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

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Tamsyn Jefferson-Harvey

Tamsyn Jefferson-Harvey is a qualified AAT accountant specialising in small business tax and business growth services. She is the founder of Seed Accounting Solutions

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