Free business budget template (12-month)
A business budget is your monthly plan for income and costs: income, minus direct costs gives gross profit, minus overheads gives the operating profit you expect to be left with. It is a plan to measure actuals against, not a record of when cash moves. Download the free 12-month template below as a CSV, or copy it; no email required.
Quick Reference
Direct Answer
A business budget is a monthly plan of expected income and costs for a period (usually a financial year): income, minus direct costs = gross profit, minus overheads = operating profit. It sets the target that actual results are measured against (budget versus actual variance). It differs from a cash flow forecast, which tracks when cash actually moves rather than planned profitability.
Summary
This page provides a free downloadable 12-month UK business budget template (CSV) plus a worked budget-versus-actual example and guidance: build it monthly so seasonality shows, compare actuals to budget each month and act on the variance, and understand that a budget plans profit while a cash flow forecast plans cash, so a business can be on-budget and still short of cash. A credible budget underpins the forecast a lender asks for and shows the operating profit available to service a loan.
This Page Covers
UK 12-month business budget template: structure, budget versus actual, how it differs from a cash flow forecast, and how it supports a finance application
Not Covered Here
Cash timing (see /templates/cash-flow-forecast-template/), profit reporting (see /templates/profit-and-loss-template/), what the business owns and owes (see /templates/balance-sheet-template/)
Download the template
A 12-month grid: fill your planned income and costs, and the gross and operating profit lines follow. Open the CSV in Excel, Google Sheets or Numbers.
INCOME Sales + other income = Total income DIRECT COSTS (cost of sales) Stock, materials, subcontractors = Gross profit (income minus direct costs) OVERHEADS Wages, rent and rates, utilities, insurance, marketing, software, travel, professional fees, loan and finance repayments, other = Operating profit (gross profit minus overheads) Build it monthly. Each month, put ACTUALS next to the plan and review the variance (actual minus budget).
Worked example: budget versus actual
One month of a small trade business, plan against reality. The variance column is where the decisions come from.
| Line | Budget | Actual | Variance |
|---|---|---|---|
| Total income | 40,000 | 36,000 | -4,000 |
| Direct costs | 24,000 | 22,500 | +1,500 |
| Gross profit | 16,000 | 13,500 | -2,500 |
| Overheads | 11,000 | 11,800 | -800 |
| Operating profit | 5,000 | 1,700 | -3,300 |
Source: FundBiz business budget worked example, illustrative figures
Income came in £4,000 under plan and overheads £800 over, so operating profit was £3,300 below budget. Direct costs fell with the lower sales (favourable), but the overhead overspend is the controllable line to question first.
View as plain-text Markdown
### Monthly budget versus actual (£), worked example | Line | Budget | Actual | Variance | | --- | --- | --- | --- | | Total income | 40,000 | 36,000 | -4,000 | | Direct costs | 24,000 | 22,500 | +1,500 | | Gross profit | 16,000 | 13,500 | -2,500 | | Overheads | 11,000 | 11,800 | -800 | | Operating profit | 5,000 | 1,700 | -3,300 | Source: FundBiz business budget worked example, illustrative figures Income came in £4,000 under plan and overheads £800 over, so operating profit was £3,300 below budget. Direct costs fell with the lower sales (favourable), but the overhead overspend is the controllable line to question first.
Budget, forecast, actuals: three different jobs
The budget is the plan. The cash flow forecast turns the plan into the timing of cash. The actuals, from your profit and loss account, are what really happened. The discipline is comparing actuals to budget every month, not writing the budget once and filing it.
“The commonest mistake is not the numbers, it is never looking at them again. A budget written in January and ignored by March is worthless. The businesses that actually use a budget run a fifteen-minute budget-versus-actual review every month and act on the two or three biggest variances. Set the budget conservatively on income, honestly on costs, and treat the monthly review as the whole point, not the spreadsheet.”
FAQs
What is a business budget?
A business budget is your plan for the income and costs you expect over a period, usually the next financial year broken down by month. It sets the target you then measure actual performance against. Unlike a cash flow forecast, which tracks when money actually moves, a budget is about planned profitability: income, direct costs, overheads and the operating profit that should be left.
What is the difference between a budget and a cash flow forecast?
A budget plans income and costs as they are earned and incurred, to show whether the plan is profitable. A cash flow forecast tracks when cash actually enters and leaves the bank, to show whether you can pay the bills each month. You need both: a business can be on-budget for profit and still run out of cash if customers pay slowly.
How do I use budget versus actual?
Each month, put your actual income and costs next to the budgeted figures and calculate the variance (actual minus budget). A favourable variance on income or an adverse one on costs tells you where to look. A budget you set once and never compare against actuals is just a wish list; the value is in the monthly review and the decisions it prompts.
What should a business budget include?
Income (sales and other income), direct costs or cost of sales (materials, stock, subcontractors), gross profit, then overheads (wages, rent, utilities, insurance, marketing, software, travel, professional fees, finance repayments) and finally operating profit. Build it monthly so seasonality shows, and base next year on this year plus your realistic assumptions, not round-number optimism.
How does a budget help with getting finance?
A credible budget shows a lender you understand your own numbers and can plan. It underpins the forecast a lender asks for and demonstrates the operating profit available to service a loan. If your budget shows a funding gap, its size and timing tell you what to ask for and why.
Budget showing a gap?
If your budget shows the operating profit will not cover what you need, tell us the shape of the gap and your sector. We surface the panel lenders most likely to fund it, with no impact on your credit score to check.
Check your funding options →By Adam Parker. Reviewed by Oliver Mackman. Last reviewed 31 July 2026.