Step 1: Start from your real story, not your desires
Every serious budget starts with the numbers for the last 12 months: sales per month (with their seasonality), variable costs as a percentage of sales, and the complete list of fixed expenses. If you don't have that history clean, your first job is to get it out — from your system, your bank, and your bills.
This is where having the operation in a single system pays: if your sales, purchases and expenses already live in Aura, this historical basis is a report, not a month of archeology in Excel.
Step 2: Budget sales methodically (not optimistically)
The budgeted sale comes from: last year's sales per month × reasonable growth + specific initiatives with name and surname (new branch, new channel, new line). A 15% growth "because we want to" is not a budget, it is a letter to Santa.
Respect seasonality: if December sells 3x and February sells half as much, your monthly budget should reflect it. A flat budget (annual total out of 12) will make you celebrate bad months and suffer good months for no reason.
Step 3: variable and fixed costs, always separated
- Variables (grow with the sale): cost of merchandise or supplies, sales and gateway commissions, shipping, packaging. Budget them as a PERCENTAGE of the sale, not an amount.
- Fixed (they exist even if you don't sell): income, base payroll, software, accountant, services, insurance. Budget them as a monthly amount.
- Semi-fixed: they grow in leaps (hire someone else, open a branch). Mark them with the month you plan to jump.
- This separation gives you your balance point: fixed ÷ contribution margin = the minimum sale of the month. Any owner should know that number by heart.
Step 4: assemble three scenarios and define triggers
Make three versions: base (most likely), conservative (sales 15-20% down) and optimistic (up). The valuable thing is not having three sheets: it is deciding IN ADVANCE what you will do in each case — what expense you cut first if it gets ugly, and what investment you accelerate if it goes better than expected.
Define specific triggers: "if we accumulate two months 15% below the base, we freeze hiring and renegotiate rent." Deciding coldly avoids hot panic decisions.
Step 5: Compare each month (this is where almost everyone fails)
A budget that is not compared against reality each month is decoration. The first days of each month, review: actual vs. budgeted sales, each expense line vs. its limit, and actual vs. expected margin. Deviations greater than 10% deserve an explanation and action.
The modern version of this is not an Excel that someone feeds by hand: it is your system comparing itself. In Aura, your actual sales and expenses are already recorded by daily operations, so the budget vs actual comparison is a live report — and the AI notifies you when a line goes out of range, without waiting for the end of the month.
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Start your trial →Frequently asked questions
When should I make the year's budget?
Ideally in November-December to start January on track. But the best date to start is today: a budget for the next 6 months is worth infinitely more than none at all.
What percentage of my sales should I allocate to each expense?
It depends on the line of business, but healthy references for retail/services: cost of sales 40-60%, total payroll 15-25%, income less than 10%, marketing 5-10%. The important thing is to know YOUR structure and improve it every year.
Are budget and cash flow the same thing?
No. The budget tells if the business is profitable on paper; The flow tells if there will be money in the account each week. You need both: you can be profitable and go bankrupt if you charge in 60 days and pay in 15.
How often do I adjust the budget?
The annual budget is respected as a reference, but make a quarterly re-forecast with new information. Changing it every week makes it useless; never touching it makes it unreal.