A CFO's Guide to Budgeting for SMBs

A CFO’s Guide to Budgeting for SMBs –Blueprint for Building and Tracking It Right If there’s one thing I’ve learned over my career, it’s that a budget isn’t just a spreadsheet—it’s your business’s GPS. With last week’s tariff turbulence and the S&P 500’s recent turbulence, small and medium businesses can’t afford to fly blind. A solid budget keeps you grounded, and monitoring it keeps you ahead. Here’s my playbook for creating and tracking one that works—straight from the CFO chair.

1. Start with Revenue Reality, Not Hope A budget built on wishful thinking is a recipe for a cash crunch. Pull your 2024 revenue—total sales, service income, whatever keeps the lights on—and adjust for 2025. Last year’s numbers are your baseline; factor in growth (5-10% if you’re steady) or contraction (say, 15% if tariffs hit your supply chain). I've seen the media call Trump’s trade moves a negotiation tactic—which could mean relief or chaos, so build in a buffer.

Tip: Use last quarter’s P&L as your starting block; it’s fresh and real.

2. Map Fixed Costs First, Then Flex Nail down what’s non-negotiable—rent, payroll, insurance. For my team, that’s 60% of our spend, locked in monthly. Then layer in variable costs—marketing, shipping, utilities: flexibility matters. Allocate 20-30% of your budget to variables you can dial up or down.

Tip: List fixed costs by due date (e.g., rent on the 1st); it syncs your cash flow rhythm.

3. Set Profit Goals, Not Just Survival

Breaking even isn’t enough—it's the starting line so aim for a margin. I target 15-20% net profit for breathing room as a general rule; SMBs should shoot for 10% minimum. Subtract fixed and variable costs from revenue, then tweak—cut $5K from discretionary spend (that trade show can wait) or boost sales targets. A budget without profit is a treadmill, not a roadmap.

Tip: Tag 5% of revenue for reinvestment—new equipment, talent, whatever fuels growth.

4. Build a Monitoring Rhythm A budget’s useless if it sits in a drawer. I check my budget weekly—revenue vs. forecast, expenses vs. plan. Last month, we caught a $3K overspend on software subs because I flagged it early. Set a cadence: daily sales quick-checks, weekly deep dives, monthly resets.

Tip: Use a dashboard (QuickBooks has a decent one) to spot red flags—overruns over 10% need a fix, fast.

5. Plan for the Unexpected

This week’s news screamed uncertainty—tariffs, market dips, you name it. Pad your budget with a contingency—10-15% of total expenses. For a $100K annual budget, that’s $10K-$15K in a cash reserve.

Tip: Park it in a high-yield savings account; 4% interest beats 0% under your mattress.

6. Behavioral Hack - Set up Specific Accounts for Key Budget Items

Here's a behavioral hack I've found helpful over time: setting up separate bank accounts for key items, like payroll, taxes, and special projects (like that growth project you've planned). Having the cash separately set aside from your normal operating account will help you keep to the other budgets you have for each of those items.

 Your SMB Budget Toolkit

- Create: Start with a 12-month spreadsheet—columns for revenue, fixed costs, variable costs, profit, contingency. Fill January from 2024 actuals, then project forward. - Track: Reconcile weekly against bank statements; adjust monthly if revenue shifts 10%+ off-plan. - Review: Quarterly sit-down—cut what’s bloated, double down on what’s working. I’ve steered companies through lean years and fat ones—budgets got us through both. For SMBs, it’s not about perfection; it’s about control. A tight budget lets you pivot when the ground shakes—like it did last week—and thrive when it steadies. Ready to build yours? Let me know how it goes for you, and drop your budgeting hacks in the comments. I’m all ears.