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Discover leading insights from our finance experts at The Finance People. Use this financial advice to enhance your strategy, to overcome common financial challenges within SMEs, or to better understand key areas of finance for business. 

How to Plan Your Quarterly Budget

Effective budget planning is essential for the success of any business, regardless of its size or industry. As a business owner or managing director of an SME in the UK, it's important to understand the importance of budget planning, particularly on a quarterly basis.

That's where this blog comes in. The purpose of this blog is to provide valuable information on the benefits of quarterly budgeting and the steps required to plan your quarterly budget. Whether you're a seasoned business owner or just starting out, this blog will help you to make informed decisions and stay on top of your finances. Keep reading to learn more about how to plan your quarterly budget.

Small business succeeding during recession
'Effective quarterly budget planning is imperative for every SME that wants to achieve their financial goals '

Why Should I Create a Quarterly Business Budget?

As a SME business owner, adopting a quarterly budgeting approach can provide numerous advantages for your business. Quarterly budgets allow for greater financial visibility, agility, and adaptability, which can help businesses stay on top of their finances and make informed decisions about future investments and expenditures. By breaking down your budget into quarterly segments, you can better track your business's performance and make necessary adjustments to stay on track with your financial goals.

Improved Financial Visibility

Improved financial visibility is one of the key benefits of quarterly budgeting for SME business owners. By dividing your budget into quarterly segments, you can better track your business's cash flow and identify potential areas of overspending or underspending. This level of financial insight can help you make informed decisions about future investments and expenditures, and ensure that your business stays on track with its long-term financial goals.

Greater Adaptability

In addition to improved financial visibility, quarterly budgets also provide greater agility and adaptability for SME business owners. By breaking down your budget into smaller segments, you can make timely adjustments to your budget as needed and respond quickly to changes in your business environment. This level of flexibility can help you stay ahead of the competition and make informed decisions about where to allocate your resources to best support your business's growth and success.

How to Plan Your Quarterly Budget

Step 1: Review Past Performance and Gather Data

The first step in planning your quarterly budget is to review past performance and gather data. This is a crucial step as it allows you to understand your financial situation and make informed decisions for the future. By analysing historical financial data, you can identify patterns and trends in your income and expenses, which can help you predict future cash flows. Additionally, reviewing past performance can help you identify areas where you overspent or underspent, and make adjustments to your budget accordingly.

To gather and review relevant data effectively, start by collecting all of your financial records from the past year, including bank statements, credit card statements, receipts, and invoices. Organise this information into categories such as income, expenses, and savings. Then, use a spreadsheet or other financial management tool to create a clear and concise overview of your financial situation. This will help you identify key trends and patterns in your spending and income.

Step 2: Define Your Financial Goals

Defining your financial goals is a crucial step in planning your quarterly budget. It allows you to set clear and measurable objectives for the upcoming quarter, which helps you stay focused and motivated. Your financial goals should be aligned with your overall business strategy and take into account any upcoming events or challenges that may affect your finances. By setting specific and achievable goals, you can track your progress and make necessary adjustments along the way. Whether it's increasing revenue, reducing expenses, or investing in new opportunities, defining your financial goals is a key component of successful budget planning.

To define your financial goals, start by reviewing your past performance and identifying areas for improvement. Consider your overall business strategy and what you hope to achieve in the upcoming quarter. Your goals should be specific, measurable, achievable, relevant, and time-bound. This means setting targets that are realistic and aligned with your overall strategy.

Step 3: Consider External Factors

When planning your quarterly budget, it's important to consider external factors that could impact your financial strategy. These factors can include market trends, industry conditions, and regulatory changes. Ignoring these external variables can lead to financial setbacks and missed opportunities.

To avoid this, it's crucial to conduct market research and stay updated with relevant industry information. By doing so, you can make informed decisions that align with the current market conditions and regulatory environment.

One way to conduct market research is to analyse data on your target audience, competitors, and industry trends. This data can be gathered through surveys, focus groups, and online research tools. Additionally, it's important to stay up to date with industry news and updates by following relevant publications and attending industry events.

Step 4: Allocate Resources and Budget Categories

Allocating resources and budget categories is the next step in planning your quarterly budget. To effectively allocate resources, it is important to identify your priorities and determine the key budget categories that will help you achieve your financial goals. This requires careful assessment of your resource needs and ensuring that they align with your financial objectives. By prioritising your spending and assigning resources accordingly, you can make the most of your budget and ensure that you are using your resources in the most effective way possible.

The process of allocating resources and budget categories involves reviewing your current spending patterns and identifying areas where you can make adjustments. This may involve cutting back on non-essential expenses or shifting resources to areas that will have a greater impact on achieving your financial goals.

Step 5: Create a Realistic Budget

Step 5 for planning your quarterly budget is to create a realistic budget. To develop a comprehensive and realistic budget, you need to first estimate your revenues and forecast your expenses. This requires analysing your past financial statements, identifying any trends, and projecting future income and expenditures. Once you have a clear understanding of your financial situation, you can start creating a budget that aligns with your goals and objectives. It's important to also incorporate contingency plans into your budget to account for unexpected expenses or revenue shortfalls.

Estimating revenues involves identifying all potential sources of income, such as sales, investments, and loans. Forecasting expenses involves analysing your past spending patterns and projecting future costs, taking into account any changes in your business or personal life. To create a realistic budget, it's important to be conservative in your estimates and factor in any unexpected events that could impact your finances. Additionally, incorporating contingency plans into your budget can help you prepare for the unexpected and avoid financial stress.

Step 6: Seek Expert Input

In the process of planning your quarterly budget, seeking expert input can be extremely beneficial. It allows you to gain valuable insights from professionals who have extensive experience in the field of finance. These experts offer valuable advice on how to allocate funds, identify potential risks, and make informed financial decisions. Additionally, seeking expert input can help you avoid common budgeting mistakes and ensure that your budget is realistic and achievable.

If you are looking to seek expert input in your budget planning process, consider consulting with finance professionals or engaging the expertise of a finance director. These professionals can provide you with a wealth of knowledge and expertise that can help you make informed decisions and achieve your financial goals. Working with a finance director can be particularly advantageous as they can help you develop a comprehensive and detailed budget that aligns with your SMEs goals and objectives. By seeking expert input, you can make sure that your quarterly budget is well-informed, effective, and tailored to meet your business’s unique needs.

The Finance People can provide flexible options for SMEs who do not require a full-time Finance Director, but could benefit from the experience and knowledge of an FD. To find out more about how our part-time Finance Directors can support your business, get in touch.

How to Plan Your Quarterly Budget

In conclusion, effective quarterly budget planning is imperative for every SME that wants to achieve their financial goals. The six key steps discussed in this blog provide a framework for developing a realistic budget that takes into account past performance, financial goals, external factors, and expert input. By investing time and effort in quarterly budget planning, you can gain better control over your finances, make informed decisions, and increase your chances of success. With a well-planned budget, you can track your progress, adjust your spending, and achieve your financial goals faster and more efficiently.

So start planning your quarterly budget today and enjoy the benefits of financial stability and security. For further support, you can arrange a consultation with The Finance People to discuss your business requirements and to tailor our services to help your business grow from strength to strength.

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