How to create a budget with this free budget spreadsheet

Budget spreadsheet for entrepreneurs

If you are looking for a budget spreadsheet where you can enter your projected income and expenses and the spreadsheet automatically calculates cash flow, tax liabilities and analyzes the numbers with some important metrics then this spreadsheet is for you.

When budgeting it is not only important to project income and expenses but how this projection affects your desired outcome. Budgeting an increase in revenue without the corresponding increases in expenses or effect on cash flow is not very effective. In this spreadsheet, you can modify the budget by making assumptions in the what if analysis tab.

Budgeting is about you telling your business where it’s going rather than going with the wind. Without a handle on your finances you can still end up broke. In order to do this, you must learn to manage your margins. This budget spreadsheet attempts to manage the following margins:

Gross Margin

Your gross margin is your revenue less your cost of goods sold. Your gross margin percentage is your gross margin as a percentage of revenue. Your gross margin tells you how much you make after you deduct directly what it cost you to purchase the product.

Let us say you buy 1,000 units of widgets for $10 each and you sell them for $40 each. Your direct profit on each unit will be $30. This $30 is your gross margin and it is profit before any other business expenses. The goal of the gross margin is to determine your direct profitability.

At $30 profit per unit, your gross margin percent is 75% (30/40). This means for each unit you sell, you keep 75% of the profits before other expenses are accounted for. Remember, gross margin only has to do with the direct cost of buying and selling the product.

Revenue $40,000 100%
Cost of goods sold $10,000 25%
Gross Margin $30,000 75%

Cost of goods sold is usually the biggest expense most manufacturers and retailers have.

Net profit margin

Net profit is defined as revenue minus total expenses. Or we could restate it by saying net profit is gross margin minus operating expenses.

Revenue $40,000 100%
Cost of goods sold $10,000 25%
Gross Margin $30,000 75%
Other expenses (Selling & Admin expenses) $25,000 63%
Net profit $5,000 13%

In the example above, we can compute net sales either by subtracting cost of goods sold and other expenses from revenue, or by subtracting other expenses from gross margin. Either way we will arrive at net profit. We see percentage wise, this business owner only keeps 13% of the revenue he or she brings in. Whether this is a good or bad number depends on the industry the business owner operates in or the owners’ goal.

After tax profit margin

Taxes are paid on net profit margin and is computed by subtracting the tax you pay from your net profit as shown below:

Revenue  $      40,000 100%
Cost of goods sold  $      10,000 25%
Gross Margin  $      30,000 75%
Other expenses (Selling & Admin expenses)  $      25,000 63%
Net profit  $        5,000 13%
Taxes (15%)  $           750 2%
Profit after taxes  $        4,250 11%

In the example above, the owner only gets to keep 11% of total revenue.

It is important you keep track of the tax rate and what tax changes affect your business. Some questions to consider that could help you reduce your tax rate are:

  • Is there any credit available, you are not taking?
  • Are you paying taxes on income that could be deferred to a year when your tax rate will be potentially lower?

The budget spreadsheet and free course makes suggestions about credits and how adjustments affect your liability

Managing revenue, expenses and taxes all simultaneously can help increase your cash flow. But be careful to choose the strategy that will maximize your profits first and then find ways to minimize your taxes.


In addition to managing margins, the budget spreadsheet illustrates metrics that point you to where you should direct your attention. Metrics are a great way to measure and optimize your financial system over time. What gets measured, gets improved. Without a system to measure how your system is doing, you are less likely to improve them. Some of the metrics discussed in this spreadsheet are:

Financial metrics:

What are the key areas of performance KPIS
1. Managing growth Return on asset
  Debt coverage ratio
2.Managing assets Receivable days
Inventory days
Payable days
Cash Conversion cycle
Changes in working capital
Cash surplus
Borrowing capacity


 Questions for Consideration:

Are you wondering what the point of this budget worksheet is? Here are some questions this worksheet might answer:

  • How does my accounts receivable and payable practices affect my cash flow?
  • Should I take a loan to accelerate growth: If there is an area that is churning cash quickly, it might be worthwhile to take a loan to expand that area?
  • What will my five-year growth rate look like?
  • What areas are at risk for fast decline and where should I focus my attention.
  • What tax savings strategies should I consider?

Get the budget spreadsheet by clicking here

Get the free tax and budgeting course by clicking here

By |2018-11-30T21:31:17+00:00November 14th, 2018|Finance|Comments Off on How to create a budget with this free budget spreadsheet

About the Author:

With over 16 years of accounting and finance experience, I know what it takes to make your business profitable. However, in my opinion of what really makes me qualified to work with you is my love for using my God-given gift to help people with numbers. I love difficult problems and my business is to be in the business of helping other people achieve their dream/vision/ goal in the most cost effective and productive way. I am very passionate about my clients and take their problems very personally.