Budget Planning Questions? We've Got Answers
Running a business in Australia means dealing with constantly changing operational costs. Here are the real questions we hear from business owners every week, plus practical answers that actually help.
Getting Started
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How do I create my first operational budget?Start with your fixed costs - rent, salaries, insurance. Then track variable expenses for three months to see patterns.
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What's the difference between operational and capital budgets?Operational covers day-to-day running costs. Capital is for big purchases like equipment or property that last years.
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How often should I review my budget?Monthly for operational budgets. Weekly during busy periods or when cash flow is tight.
Common Challenges
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My actual costs never match my budget. Why?Usually because of seasonal variations or one-off expenses you forgot to include. Build in a 10-15% buffer.
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How do I handle unexpected expenses?Create an emergency fund equal to 2-3 months of operating costs. Review and adjust quarterly.
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Should I budget for growth or stay conservative?Create two versions - a conservative baseline and a growth scenario. Plan for the conservative, prepare for growth.
Detailed Budget Guidance
What percentage of revenue should go to different expense categories?
This varies hugely by industry, but here's what we typically see working well: Staff costs around 25-35% of revenue for service businesses, rent and utilities about 5-10%, marketing 3-7%. The key is tracking your own ratios over time. A restaurant will look completely different from a consulting firm. What matters is consistency and knowing when your ratios shift - that's usually when problems start.
How do I budget for seasonal businesses?
Look at three years of data if you have it. Map out your high and low months, then work backwards from your annual revenue target. During peak season, you need to bank enough cash for the quiet months. We recommend keeping 4-6 months of operating expenses in reserve. Also, consider what costs you can reduce during slow periods - temporary staff, reduced hours, scaled-back marketing spend.
What's the biggest budgeting mistake Australian businesses make?
Underestimating compliance costs. Between GST, superannuation, WorkCover, and industry-specific regulations, these add up fast. Many business owners focus on the obvious costs and get blindsided by regulatory expenses. Set aside 3-5% of revenue just for compliance-related costs. It sounds like a lot, but it's better than scrambling when the ATO comes knocking or when you need to renew licenses you forgot about.
Helpful Resources
Advanced Topics
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How do I budget for staff growth?Factor in salary, super, WorkCover, training costs, and equipment. A k employee actually costs around k.
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Should I use budgeting software?Start with spreadsheets until you outgrow them. Most small businesses need simple tracking, not complex systems.
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How do I budget for technology upgrades?Technology becomes obsolete every 3-5 years. Set aside 2-4% of revenue annually for upgrades and replacements.
Cash Flow Questions
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How do I manage cash flow gaps?Invoice promptly, offer early payment discounts, and maintain a line of credit before you need it.
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What's the best way to forecast cash flow?Track payment patterns from customers and your own payment cycles. Most clients pay in 30-45 days, not 30.
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How much working capital do I need?Generally 2-3 months of operating expenses, but it depends on your industry and payment terms.