How to Budget and Forecast for your SME Business?
TOPIC POSTED ON 29 Jan, 2022 BY Sibghat & Co Management


Starting an SME (Small to Medium Enterprise) demands a lot of patience, dedication, hard work and of course, a considerable budget. Before investing in any business, you first need to make a proper planning. Budgeting and forecasting are essential before stepping into the market, as it tells you how much investment you require and what profit you can expect to make over the period of time.

Start-up Costs

Star up cost is the most significant investment you make, either starting a new business or buying a running one. You will need to cover several factors while estimating the start-up costs. Some of those factors are:

  • The cost or rental of the property
  • Cost of buying or leasing plants or equipment
  • Accounting or legal fees
  • Insurance costs
  • Marketing
  • Permits
  • Stock
  • Furniture, decoration and fittings
  • Staff wages & salaries
  • Working capital until it starts making a profit

Mostly the cost of starting a business rises more than as expected, so make sure to have buffer  amount as contingency planning to the budget.


No one can tell the exact figure of how much sales your SME business is going to generate. However we can make a rough estimate looking at the current market situation, if you are buying an established business, you should check the previous stats to have an idea of the future. Although it isn't necessary that it will generate the same sales in the future as well cause the market can go down over time. Compare your daily sales with the forecast, and if they are more than expected, then it is well and good, but if they are going down, try to sort out the blunder you are committing before it is too late.


Expenses of a business can be forecasted by looking at current market trends. But always remember to add some extra amount to the budget that you may need in an emergency. Most of the capital and operational expenses you’re able to easily pre-plan and list them down as the expectancy of occurrence is high and known. If you are buying a running business, you should see older records to understand and analyses future expenses trend.

Cost Of Goods Sold

If your SME business sells a physical product, you always need to keep the cost of goods in mind. When you expect an increase in sales, you should know that the cost of goods production/buying will also increase proportionately. To forecast the cost of the products, you need to keep several things on the chart. Such as, it will increase all the expenses from buying the RAW material to the delivery. The expenses can be preparing the product, labor cost, commission, packaging, utilities, transport charges, and etc.


Once you have started the business, your product or service is ready to be provided to customers when everything is accomplished. Now, how will customers know about your business? Definitely through marketing. Marketing is the backbone of every enterprise. If done in the right way, it can boost sales and flourish the business. When making a budget and forecast of your SME business, you must include the expenses done on marketing. For example, placing billboards, advertising, making pamphlets and business cards, etc.

Cash Flow

Cash flow is a rough estimate of how much money will come in and how much will be given out. It tells you at which time of year the money will be lesser so you can prepare for it beforehand. With the proper forecasting, you can expand your business very well, when the cash flow is positive, you can invest and boost the business by adding more products/services or staff.

Review your cash flow forecast regularly, as it can give you early warning signs of a financial crisis.


Successful Budgeting Tips

These are some of the best forecasting and budgeting tips, especially for SME businesses. If you follow them, the chances of business failure will be minimized.

Know Your Risks

Every business has ups and downs, and every successful business person prepares their company for unfortunate times. You must know what problems can occur and how you would respond to them, such as natural disasters, drought, earthquakes, etc. If your business is seasonal, such as selling Christmas decorated trees, you should have a strategy of working in other months of the year when Christmas isn't near.

Be Prepared

Like not every day is same similarly not all months sales are same, at sometimes sales are higher and sometimes no sales at all. It would help if you had credit to pay bills and other expenses when the business is down. Save money at good times to spend when the unwanted critical time comes. Market your business only when the season of sale of your product or service starts. Only at that time spend money on marketing/advertising to gather the maximum number of customers.

Time Is Money

A businessman's time is really important, especially for a newbie person in business, so always use it wisely. You should spend most of your time making strategies for the future and escalating your business further. Please do not waste time on unnecessary things such as decorating and improving the furniture; let it be what it is. Focus on your primary goal, which is to grow and evolve in the market. Do not procrastinate or give early commitments which you can't fulfill. Laziness can destroy the future of you and your business.

Consult a Business Advisory

Consulting with a business advisory can help you grow your business smoothly and give you regular expert advises to improve you’re your business strategies and prospects. Zaitox Chartered Accountants is one of the leading firms that provide different expert services, including business advisory. Zaitox team have highly qualified charted accountants with more than 20 years of experience on field and in the region.

SME business is the dream of various people, but not everyone can be prosperous in it. Where required hire an expert consultant team for a secured business future. With your patience and hard work, one day, you will achieve what you dreamed.