Do the words “budget planning” make you groan? For many people, it’s on par with being stuck on a cross-country flight next to a screaming baby. Or calling [insert company you dislike most here]’s customer service line. 

It doesn’t have to be that way. Budget planning is not all about limitations. In fact, budget planning can be freeing! As John Maxwell said, “A budget is telling your money where to go instead of wondering where it went.” 

You control your budget. Your budget does not control you.

Budget planning is undoubtedly a key component of your small business’s financial success. Therefore in this article, we’ll discuss the importance and benefits of small business budget planning.

1 | Clear Goals and Strategies to Plan Your Budget

Planning a budget for your business provides you with an opportunity to plan strategically for the year ahead. The first step in budget planning is identifying your financial goals. What do you want to achieve? 

Here are a few common small business financial goals, with links to get you started on some of these right now:

Goals should be SMART: Specific, Measurable, Achievable, Realistic, and Timely. An example of a SMART goal is: “Grow net operating profit by 10%, to $250,000 by the end of the year”

Next, consider how exactly you’re going to achieve your goals. For example, if you want to increase revenue, what specifically do you need to do to make it happen? 

  • Do you need to hire more salespeople?  (Use our new hire cost calculator!)
  • Spend more on research and development to launch a new product? 
  • Engage a marketing agency to increase brand awareness?

As you work through this process, don’t lose sight of any constraints on your resources. Most businesses do not have unlimited cash to spend. Therefore, you should allocate resources to the initiatives that are most impactful to your business. Prioritize your spending to get the most bang for your buck! GET HELP WITH YOUR BUDGET

2 | A Path to Greater Profit

Effective budget planning details anticipated income and expenses by month. It charts your path to greater profit. How?

Well, your budget should include detailed information about revenue by product and service. It should break down spending by account categories, such as professional services, software, and employee compensation. Need a budget template to get started?  Download Momentum CFO’s budget template for free!

In addition, it’s a good idea to document supporting details for those account categories as needed. Your budget may include additional schedules that show compensation costs by employee, or the components of spending specific marketing initiatives. 

That way, when you refer to your budget, you’re not just looking at one big number, trying to remember how you came up with it. Instead, you’ll be able to review the details of your spending.

Net profit (your “bottom line”) essentially equals revenue minus the cost of goods sold and all other expenses. After you’ve completed your budget planning, you’ll have a custom-made plan to achieve your profit goals. 

3 | A Way to Measure Financial Performance

Another benefit of budget planning is that it gives you a way to measure your small business’s financial performance. Businesses become and stay profitable with careful financial management. Therefore, analyzing variances between your actual financial results and your budget (a process known as “variance analysis”) keeps you on track to achieve your financial goals.

Review variances between the two sets of numbers each month so you can identify where you may be getting off track from your budget. For example, if you find that sales are $50,000 lower than you expected in the first quarter, you’ll need to cut expenses by the same amount to achieve the profit goal you set. Don’t put off this important task. If you procrastinate, by the time you’ve identified a problem, it may be too late to solve it.

Don’t have the time or inclination to do complete variance analysis yourself? As part of our CFO Services, Momentum CFO can analyze your financial results each month. We will deliver them to you in easy-to-understand financial dashboards. All of your critical financial information will be at your fingertips! 

In addition, we can provide you with analysis and customized financial recommendations that don’t take a degree in finance to understand.  

4 | Confidence About Financial Decisions

Budget planning gives you greater confidence about making financial decisions. Here’s why:

  • You have already set your goals and developed strategies to achieve them
  • You’ve determined how much you’re going to spend 
  • You know what you’re going to spend it on 

By planning out your budget for the year, it takes a lot of the guesswork out of how to manage your business’s finances. That makes it much easier to decide whether you should sign that contract, make a big purchase, or hire a new employee! 

Ideally, you should share your budget plan with your leadership team. You and your staff should be on the same page, working towards the same goals. Stick to your plan as much as possible and you’ll be on your way to a great year!

Budget Planning: The Bottom Line

As Dale Carnegie said, “An hour of planning can save you ten hours of doing.”  Take the time now to plan for the next year. By doing so, it will help you set the strategic financial direction of your business and provide a path to greater profitability. Budget planning provides a way to measure financial performance, course correct as needed, and feel confident about your financial decisions.  

Need help? You don’t have to tackle budgeting on your own.  Download our budget template to get started today! Then, let Momentum CFO do the heavy lifting for you.  Schedule a free consultation to learn how we can help you plan for financial success in the year to come!

Is your company motivated to create a better annual budget?

Perhaps, in years past budgets have been made (or set) and then reality has crept in proving projections wrong, or the annual budget was based only on historical data and not on well-planned forecasting.  Whatever the case, the promise of a practical, useable annual budget lures many mid-sized business owners into re-examining the process of creating and using an annual budget. 

For corporations and nonprofits alike, annual budgets are crucial to planning income sources and allocating funds for predictable expenses. Planning for those assets, liabilities, and equity as well as cash flow, debt management, or discretionary purposes is necessary for a company to continue to operate. 

When creating a forward-looking budget, the danger is in the desire to make it perfect. Instead of trying to make the budget perfect, let it be a scaffold that the quarterly forecasting will fill in. It is important for companies to set specific cash flow and operational targets. Once those are set, they act as the benchmark for quarterly re-evaluations and forecasting based on actual results. Without quarterly assessments of areas in which the budget and actual expenses are not in sync, there is no room to course-correct in real-time. 

Between the labor-intensive task of creating an effective budget and then updating it with real-time data, many businesses fall back on guesswork and conjecture. The day-to-day running of the business doesn’t allow for the necessary time and level of detail to get accurate, timely, effective numbers. 

Bringing in a fractional CFO can provide the insights necessary to implement an actionable annual budget that gets used by leadership and your internal accounting department.

According to Deloitte’s Global Outsourcing Survey, 59% of companies that outsource do so because of the cost-cutting benefits. While there are many other advantages to outsourcing, one of the most compelling is the ability to reduce costs associated with hiring C-suite team members.

When your company has access to the insights an accurate annual budget provides with the help of a fractional CFO you will be able to more accurately predict and plan for stages of growth.


Today we are talking about the 8 components of creating a business plan. Starting a business is both exciting and challenging. You can design your own career, be your own boss, and pursue your passion. But, according to the Small Business Administration, only two-thirds of businesses survive at least two years. About half survive at least five years.

Want to know the secret to start off on the right foot?  It’s a killer business plan. You need to define your strategy and tactics for establishing a business with a strong financial foundation.

Are you feeling unsure or overwhelmed about how to get started? Don’t worry. Momentum CFO can help. Let’s start by learning the 8 essential components of a killer business plan. 

1 | Executive Summary

The Executive Summary is the first section of your business plan. It’s a concise and compelling summary of all the other  sections of your plan. It’s the first content section of your business plan, but it should be the last thing you write. Make it short and sweet. Give the reader the big picture of what your business is all about.

2 | Business Description and Mission

Second, describe your business and its mission. Why are you starting the business? When will you launch it? What is your mission? Your vision? Describe your business goals. Make sure your goals are SMART: specific, measurable, achievable, realistic, and time bound.

Provide this information, along with facts about where your business is located, how it’s organized as a legal entity, and your contact information.

3 | Products and Services

Third, the Products and Services section is where you describe the products and/or services you’ll sell. What is their purpose? Why are they unique? How will you price them? 

New business owners often initially set their prices by “gut feel”.  They don’t do the research and analysis required to ensure that their pricing is profitable. Pricing analysis is complex. But, it’s also crucial to the success of your business. Engage an experienced CFO to develop a profitable pricing framework.

4 | Market Research and Competitive Analysis

Fourth, use the Market Research section to describe a problem or need exists in your industry and how your business addresses it. What are the key attributes of your ideal customer? Be specific. The more specific you are, the easier it will be to design a targeted marketing and sales strategy.

Analyze your main competitors. How long have they been in business? What is their market share? What advantages do they have over your business and vice versa?

5 | Marketing and Sales Strategy

Fifth, the Marketing and Sales Strategy section details your plan for acquiring new customers. New business owners are often overly optimistic about how many customers they can bring on in their first year. That’s why is vital to develop a comprehensive sales and marketing strategy.

In this section, describe your overall marketing strategy. Explain the specific tactics you’ll use to drive brand awareness and sales.  How will you reach your target customers? What advertising and promotion channels will you use? Will you develop an awesome website? Ensure it’s optimized for search? Run social media marketing campaigns? Use print or online ads? 

Think about this carefully. You need enough customers to have a viable business.

6 | Organization and Management

The Organization and Management section is up next. Provide information about yourself and your leadership team here. Lenders and investors want to be assured that leadership is competent.

Describe your education and experience. What are your notable achievements? Are you a member of relevant professional organizations? What makes you suited to run this business? Highlight your accomplishments. Next, do the same for other key leaders in your organization.

7 | Financials

The Financials section is an extremely important part of your business plan. How will you fund your business? 

Some business owners “bootstrap”, putting their own money into the business. Others seek funds from friends and family. Business owners with larger capital requirements may seek angel or private equity investment. Still others will apply for small business or personal loans.

Are you seeking capital from outside sources? Know that lenders and investors will scrutinize the Financials section. It helps them decide whether to lend to you or invest in your business. Include schedules such as a profit and loss projection and a cash flow projection.

There are several important parts of the Financials section. Don’t have a financial background? Engage a CFO to help. It’s important to get this section right. You can’t run a profitable business without a detailed financial plan.

8 | Finishing Touches: Table of Contents and Appendix

The final subject in our 8 components of a business plan: include a Table of Contents at the beginning of your business plan. Add an Appendix section at the end. Next, include important supporting documents. These may include your financial projections, business licenses, the resumes of you and your leadership team, etc.

Final Thoughts

In conclusion, starting a new business is exciting! It takes careful planning to do it well. Momentum CFO’s startup planning and implementation services put you on the path to achieving long-term success. 

Our Smart Start Strategy service includes a tailor-made road map for successfully starting your business. It covers:

  • Smart Start checklist of crucial startup tasks
  • One-on-one financial strategy sessions 
  • A comprehensive written business plan 
  • Financial projections for your first year in business
  • Recommendations for financing your business

Ready to get started? Book a free consultation today!BOOK YOUR CONSULTATION

Be sure to check out our other resources for small business:

Learn Your Total Costs of Hiring

Are you planning on hiring new employees? Before you start recruiting, it’s important to understand the total costs of hiring.

A common misconception among small to mid-sized business owners is that the cost of a new employee is limited to his or her salary or hourly wages.  It’s easy to overlook how employer-paid costs such as payroll taxes and insurance, benefits, job supplies, recruiting, and harder-to-quantify costs can easily tack on another 25% or more to the cost of your new hire.  So before you hire, download Momentum CFO’s New Hire Cost Calculator to determine the true costs of hiring an employee. DOWNLOAD NOW

Here’s a preview of what you’ll receive:

About Momentum CFO

Momentum CFO is a boutique firm specializing in outsourced Chief Financial Officer services for small to mid-size businesses. We bring the benefits of Fortune 500 financial expertise to your business without the expense of hiring a full-time CFO. 

An experienced CFO can help you quantify the total costs hiring so that there are no unpleasant surprises that negatively impact your cash flow.  

To learn more, contact us at 858.284.0314 or schedule your free financial consultation.