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How to Prepare A Sales Budget for a Small Business

Reading Time: 4 minutes

Learn how to prepare your sales budget following your sales and marketing plans.

Budgeting is a basic process for any form of business. Certainly, being a small business is not an excuse to not prepare a budget. I would say it is, even more, helpful for a small business to create a budget. Because a small business has limited resources – money, time, and effort. Two types of budgets are highly useful for a small business. Those are operating budget and cash budget. howto do budgeting and forecasting for small business Learn how to

Operating Budget Components


The operating budget has three major components. Your Sales budget, Cost of Goods Sold, and Operating Expenses. This is the most basic budget which captures your plans into a simplified form. You should prepare your operating budget months before the next financial year. Larger companies start working on the budget as early as June or July. Usually completed by September to allow global consolidation. That is if there are no more adjustments needed.

Sales Budget

For a small business, you can start data gathering and planning by August. You should already work on your sales, and marketing plan. Planning early and deciding what you need to focus on helping you finish earlier and faster. You cannot prepare a budget if you don’t have a set plan. Further, you cannot make your current business requirements as your ONLY reference

This post will cover how to prepare the sales part of an operating budget. You will learn what to include in your budget with regard to sales.

Leading Questions for your Sales Budget

A budget is a great tool to help you grow your business. Therefore, you should make sure to include your plans on growing your business. You really have to drill down and come up with a concrete plan. So here are some sample questions you can answer to come up with your sales plan. Further, do your research to get some data.

  • What is your goal for the following year?
  • How much is your income goal? Are you going to scale and how?
  • Will you niche down and offer courses?
  • Keep your current service packages?
  • When are you going to launch?
  • How many new clients are you targeting?
  • Will you hire a business coach to help you scale?
  • Will you increase your pricing? If so, when?
  • What is the impact of increasing your pricing?
  • Will you book less and if less, how much decrease will you tolerate?
  • How will you match the decrease in the number of clients?
  • Will you launch other income-generating activities?

Sales and/or Revenue

Sales is the meat of all businesses. It’s the income generated from the sales of goods or services. This is the most basic element of the operating budget. Your sales budget reflects your sales plan. So you should have here your target sales, expressed in unit AND dollar value. Be more specific and accurate as much as possible.

Prepare your sales expectations for each of your service or product categories. Also include income sources which you will be driving for the coming period. These make up your total revenue. Revenue is your goods or services sold plus other income sources.

How to Create a Sales Budget

Using a spreadsheet, create separate fields for Quantity/Unit, Pricing, and Dollar sales. In the case of an online business, units can be your number of clients, or membership sign-ups. Prepare and present your sales budget in a monthly and quarterly format. Some prepare just the quarterly or annual. But, it is not recommended to do so because it doesn’t provide you much insight.

It is better to breakdown your sales plan as much as you can. Because you can derive more action and create more opportunities. You can choose to make it simple by not presenting the quantity and pricing separately. Like showing only sales value (dollar) but again, it will not give you much room for improvement. Furthermore, the separation allows you to be more strategic. You can accurately plan when to increase pricing and push more bookings.

Below is an example. The columns shown are for your budget. Then next to these columns are your Actuals. You can easily compare your budgeted and actual sales once you have actual sales.

Operating Expenses$$$ creatives support_welcome1 financial planning and analysis for entrepreneurs systems workflows free templates canva trello blog management pinterest management sales budget

How to Come Up with Sales Estimates

Smaller companies can prepare a sales budget for the entire business. In contrast to larger companies, the sales expectation can come from the business units. These then will be aggregated for the whole company. Big corporations get the input of the Supply Chain Department, Production, and Marketing. They come up with the expected sales volume then pass for approval by the CEO and Board.

Refer to historical data when you create your INITIAL sales estimates. Then adjust according to your sales and marketing plan. You can also base your sales estimates from seasonal activities. For an online business, sales is low during enrollment season and high on the holiday season. So factor that on your budget.

Also, adjust your budget on months where you do push marketing. Identify the potential increase and until when the impact lasts. Another is to include a new service or product offering and input them on your launch month. Not the start of the year.

Further Reading

Introduction to Budgeting and Forecasting
What’s the difference between budget and forecast? Why do you need a budget and a forecast? When to do a budget and a forecast?

Learn how to prepare a budget:
Cost of Goods Sold Budget
Operating Expense Budget

Forecasting 101 for a Small Business

Free Simple Forecasting Tool

Do you need help with your budget and forecast? Avail of my FinancialClarity services. I can help you organize your plan, convert your action plan into numbers, and review your numbers monthly.

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The sales budget is the most basic element of the operating budget. It reflects your sales plan. Be more specific and accurate as much as possible. creatives support_welcome1 financial planning and analysis for entrepreneurs systems workflows free templates canva trello blog management pinterest management

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