You’re a cool startup. You’re moving fast and pivoting as needed. Nothing is written in stone and your team is small enough that you can change direction quickly. What do you need a budget for? Budgets are for big companies with accounting departments and corporate cost codes, not startups, right?
Wrong.
Startups need one of those. Your startup is hopefully producing revenue and might even be making enough money that you can start spending on things like other team members to help your business grow. You need a plan to know which people to hire, and when and how new hires will affect your revenue and expenses. This is your budget, aka growth strategy plan, aka you need this!
Budgeting is hard, and your growth plan needs to be simple and flexible. There are distinct benefits to using a spreadsheet template:
LogicBoost has created a free startup budget template specifically for tech startups—our specialty.
We deliberately keep it to a single sheet for simplicity and avoid complex formulas. Feel free to customize it to your liking!
The most important financial documents for your startup are your Balance Sheet and your Profit & Loss statement. Get these monthly from your bookkeeper and review them in your monthly board meeting. Your budget should roughly follow the format of your Profit & Less statement but be projections instead of actuals. At a high level, you want to see how your revenue grows compared to your expenses.
In a B2B SaaS startup, your revenue section should track:
Your expenses should be detailed on the number of hires around:
You probably require less granularity over fixes costs like founders’ salaries and General and Administrative (G&A) expense. But you do need to see the bottom line each month showing the profit or loss, and also the cash on hand. Remember cash is oxygen for your tech startup—without cash your startup dies.
The purpose of using a startup budget template is to experiment with your budget by changing your hires to see how you expect it to affect revenue growth. Then, compare that to the cost of those hires, your profitability and how it impacts your cash on hand.
It’s not easy, and the answer will be different depending on your needs, dreams, and financial resources. And that’s where the flexibility of your budget template comes into play.
These are the typical questions you must ask:
If you’re lucky, you already know the exact answer to some of the questions, but there’s a good chance you’ll be making some educated guesses, seeing how they affect your budget, and revising them.
Not really. It is mostly a planning tool. You will learn things over time and the budget plan will change. Perhaps you realize that your inbound marketing is not as effective as you anticipated, and you need to spend more money on outbound efforts. This will change your hiring plans and you will have to adapt your budget. This is where you’ll be glad you used a template.
Improving your budgeting skills will pay off over time. The budget will become more important to the business as you slowly build entire departments, and management expands. Your budgeting muscle is a good one to start exercising!
If you haven’t already, download our Tech Startup Budget Template here. It’s free!