Creating your SME's budget forecast: methodology and tips

Why create a budget forecast for your SME

An SME budget forecast isn't just an administrative formality. It's a genuine management tool that allows you to anticipate your cash flow needs and make informed decisions.

With a well-constructed budget, you identify financial risks before they become critical. You know when you'll need liquidity and can plan your investments with confidence.

The budget forecast also helps you set quantified objectives and measure your progress throughout the year. It's the foundation of sound financial management.

To deepen your company's management, consult our guide on the 5 essential financial indicators and our advice for avoiding liquidity problems.

The essential elements of an SME budget forecast

A comprehensive financial plan relies on several key components that you must master.

First, revenue forecasts: estimate your income month by month, taking into account your history and current contracts.

Next, list your fixed costs (rent, salaries, insurance) and variable costs (raw materials, commissions, travel expenses).

Don't forget planned investments: equipment, recruitment, development of new products.

Finally, integrate Swiss tax obligations: VAT, social charges, tax provisions. These elements are often underestimated and can create unpleasant surprises.

Revenue forecasts

Estimating your turnover requires realism and method. Start by analysing your historical data: what was your revenue over the last 12 to 24 months?

Identify the seasonality of your activity. If you're in tourism or construction, certain months will naturally be stronger than others.

Examine your sales pipeline: which contracts are signed? Which are in advanced negotiation? Assign realistic completion probabilities (50%, 75%, 90%).

The main trap: excessive optimism. It's better to forecast 10% less and be pleasantly surprised than the opposite. An overly optimistic budget becomes useless from the first month.

Fixed and variable costs

The distinction between fixed and variable costs is essential for adjusting your budget according to actual activity.

Fixed costs remain constant regardless of your turnover: rent, base salaries, software subscriptions, insurance, leasing. They constitute your minimum break-even point.

Variable costs evolve with your activity: raw materials, sales commissions, subcontracting fees, delivery costs. The more you sell, the more these costs increase.

Properly categorising your costs allows you to quickly identify where to act in case of reduced activity. Variable costs can be reduced quickly, fixed costs require structural decisions.

VAT and Swiss tax obligations

In Switzerland, VAT must be integrated from the construction of your budget forecast. Depending on your activity, you'll apply the standard rate of 8.1%, the special rate of 3.8% (accommodation) or the reduced rate of 2.6% (basic food).

Plan for quarterly declarations and the impact on your cash flow: you collect VAT from your clients but must remit it to the FTA.

Don't forget social charges (OASI, DI, ICA, UI) which represent approximately 12-14% of gross salaries, and tax provisions for cantonal and federal taxes.

These obligations often represent 20-30% of your revenue. Ignoring them in your budget creates a major gap between forecasts and reality.

5-step methodology to build your budget

Building an effective budget forecast follows a structured approach. No need to be an accountant: with method and common sense, you can establish a reliable budget.

The following 5 steps guide you from initial diagnosis to final validation. Each step builds on the previous one to progressively construct your financial plan.

Allow 2 to 3 days of work for a first complete budget. In subsequent years, the exercise will be faster as you'll already have the structure and historical data.

The important thing: remain pragmatic and don't seek perfection. An approximate but realistic budget is better than a detailed plan disconnected from reality.

Step 1: Analyse financial history

Start by gathering your financial data from the last 12 to 24 months. Export your invoices from BePaid, retrieve your bank statements and profit and loss accounts if you have them.

Identify trends: is your activity growing? By how much on average? What are the strong and weak months?

Analyse peaks and troughs: are they predictable (seasonality) or exceptional (large one-off contract)? This distinction is crucial for projecting the future.

If you lack structured data, consult our article on the cash flow statement to better organise your financial tracking.

Step 2: Define commercial objectives

Your budget must reflect your business strategy. What are your objectives for the year? 15% growth? Launch of a new service? Recruitment of a salesperson?

Translate each objective into concrete financial impact. A new salesperson costs X in salary and charges, but should generate Y in additional turnover from month Z.

Be realistic about timelines. A new product doesn't generate revenue in the first month. A recruitment takes 3 months before being fully operational.

Align your ambitions with your resources. A 50% growth objective without additional means remains wishful thinking, not a financial plan.

Step 3: List all foreseeable expenses

Make an exhaustive inventory of all your foreseeable expenses. Review your bank statements from recent months to forget nothing.

Distinguish recurring expenses (monthly, quarterly, annual) from one-off expenses (investments, training, events).

Don't forget small expenses that accumulate: software subscriptions, bank fees, supplies, telephony, various insurance.

Systematically add a safety margin of 5 to 10% for unforeseen events. Every year brings its share of surprises: urgent repair, supplier price increase, opportunity to seize quickly.

Step 4: Build the monthly budget

Don't settle for an annual budget. Breaking down your forecasts month by month is essential to account for seasonality and effectively track your cash flow.

Use an Excel or Google Sheets spreadsheet with a simple structure: one column per month, one row per revenue or expense item, automatic totals.

Integrate payment delays: if your clients pay at 30 days, an invoice issued in January will be collected in February. This delay directly impacts your cash flow.

This monthly budget becomes your reference for budget vs actual tracking throughout the year. Without monthly breakdown, it's impossible to quickly detect variances.

Step 5: Validate and adjust with your team

A budget built alone in your corner has little chance of being respected. Involve your key collaborators: sales manager, production, HR if you have them.

Each brings their expertise: the salesperson knows the pipeline and sales cycles, the production manager knows what investments are necessary.

Organise a validation meeting to confront assumptions and challenge estimates. Difficult questions now avoid unpleasant surprises later.

A shared budget understood by the team becomes a collective management tool. Everyone knows the objectives and can adapt their decisions accordingly.

Tools and templates to facilitate the exercise

No need to invest in complex software for your first budget forecast. A simple Excel or Google Sheets spreadsheet is largely sufficient for most SMEs.

Many free templates exist online, adapted to Swiss SMEs. Look for templates that already integrate VAT and the main expense categories.

For more structured companies, tools like Banana Accounting or Crésus offer budget modules integrated with accounting.

On the invoicing side, BePaid helps you track your issued invoices and actual collections. This data directly feeds your budget vs actual tracking and allows you to quickly adjust your cash flow forecasts.

Budget vs actual tracking: the crucial step

A budget that stays in a drawer is useless. The essential part happens in monthly budget vs actual tracking.

Each month, compare your actual achievements (turnover collected, expenses paid) with your forecasts. Calculate variances in absolute value and percentage.

Analyse the causes of variances: delay from an important client? Unforeseen expense? Exceptional sale? Understanding the "why" is more important than noting the "how much".

This regular tracking allows you to anticipate cash flow problems and adjust your strategy in real time. Complete this approach with key financial indicators for comprehensive management.

Adjustments during the year: when and how

Your budget isn't set in stone. It must evolve with the reality of your activity.

When to revise? When variances exceed 15-20% over several consecutive months, during a major strategic change, or facing a significant unforeseen event (loss of a large client, growth opportunity).

How to adjust? Organise formal quarterly reviews. Use the same methodology as for the initial budget, but integrating actual data from elapsed months.

Build alternative scenarios: optimistic, realistic, pessimistic. This approach prepares you for different eventualities and facilitates rapid decision-making if necessary.

Communicate adjustments transparently to your team to maintain alignment and trust.

Pitfalls to avoid when establishing the budget

Certain errors systematically recur in SME budget forecasts.

Excessive optimism about sales is trap number one. Multiply your initial estimate by 0.8 to be more realistic.

Underestimating expenses: forgetting VAT, complete social charges, small recurring expenses that accumulate.

A budget that's too detailed becomes unmanageable (100 different expense lines), whilst a budget that's too vague allows no management ("miscellaneous expenses" represents 40% of the total).

Absence of safety margin: planning 0 francs for unforeseen events guarantees that your budget will be wrong from the first month.

Finally, a budget disconnected from the field, built without consulting operational staff, remains theoretical and useless. To avoid these errors, consult our list of 10 common financial management mistakes.

Budget forecast and cash flow management

Budget forecast and cash flow are intimately linked but should not be confused. The budget forecasts your revenue and expenses, cash flow tracks your actual collections and disbursements.

This distinction is crucial: you can be profitable on paper but in cash flow difficulty if your clients pay late.

Systematically integrate payment terms into your budget: clients at 30 or 60 days, suppliers at 30 days, quarterly VAT, monthly salaries. These delays create cash flow needs that must be anticipated.

A good budget forecast allows you to anticipate these tensions and organise your financing in advance. To deepen this essential subject, consult our 5 tips to manage your cash flow effectively.

A well-constructed budget forecast gives you a clear vision of your financial trajectory and allows you to anticipate lean periods. By analysing your history, listing your fixed and variable costs, and integrating your cash flow obligations, you lay the foundations for sound management.

The exercise doesn't stop at creating the document. Regular budget versus actual tracking remains the most important step. This is what allows you to adjust your course during the year and avoid unpleasant surprises. Combine your budget with relevant financial indicators to effectively manage your SME.

To facilitate this daily tracking, BePaid helps you track your payments in real time and anticipate your collections. With accounting exports and bank reconciliation, you maintain a precise view of your actual cash flow. Create your free account and test the platform without commitment.