The Tyro Blog

24 January 2022 - 4 min read

Business Strategies

Budgeting tips for your small business in 2022

There are no two ways about it – if you’ve got a small business, you’ve got to budget. Outlining your capital, estimated expenses, and anticipated revenues for the year ahead allows you to operate within your means, make confident financial decisions, and (ideally) turn a profit. It also provides essential information that you can re-evaluate to manage any unexpected challenges that come your way.

After the turbulent few years we’ve had as a result of the pandemic, budgeting is more important than ever, to ensure you not only stay afloat but thrive in the current consumer climate. Heading into 2022, small businesses can expect a shift in consumer behaviour, which may impact where they need to place funds to fulfil their consumer needs, such as their marketing strategy.

Customers are predicted to spend more time at home and engage in contactless shopping (i.e. online or curbside); be more environmentally conscious of their spending; go on shopping sprees with all the savings they’ve built up during lockdowns; and engage in omni-channel shopping—which involves using a variety of experiences to make a purchase.

With these business predictions in mind, read on to discover budgeting tips that your small business can implement to stay on top in 2022.

Small business budgeting tips

1. Define and understand your risks

An important part of small business budgeting is considering long- and short-term risks that may threaten productivity and profit, so you can effectively plan for your financial future.

Depending on your business structure and size, unforeseeable circumstances worth filtering into your financial forecasting include:

  • pandemic: additional waves of coronavirus or a new flu strain
  • natural disasters: storm, flood, drought, fire, earthquake
  • service interruptions: power, water, telecommunications, transportation
  • technology failures: outdated equipment, network failures, skill shortfall
  • security breaches: cyberattack, fraud, theft, vandalism
  • workplace incidents: machinery mishaps, road accidents, chemical spills
  • new government regulations: restrictions, taxes, or levies
  • legal liabilities: customer or employee disputes, contract problems, insurance, or regulations
  • financial developments: increase in interest rate, supplier price, shipping costs, or slow-paying clients
  • market changes: increased competition and reduced demand

Where possible, you should set up a risk management plan and insure against the most likely risks; that way, you have peace of mind knowing that if things go wrong, you’re covered.

2. Overestimate your expenses

As a small business owner, one of the best ways to avoid seeing a negative sign on your bottom line is to overestimate your expenses.

Failing to anticipate an expense or its magnitude could cripple the business before it’s even had time to grow, so it’s important to give yourself wiggle room to mitigate any losses. As a general rule, you should add 10-20% to your best estimates under each expense.

3. Pay attention to your sales cycle

As any small business owner knows, sales aren’t always consistent; instead, they fluctuate as a result of a variety of factors unique to every business. Analysing your existing sales data (i.e. when and how much people are spending during certain periods) is an excellent way to predict your future cash flow.

Using quieter periods to ramp up marketing efforts and prevent profits from grinding to a halt, as well as planning for your next sales boom, is a great way to keep things moving in a cost-effective way.

Plus, knowing when your peaks and lulls occur can help inform more accurate business budgeting.

4. Set your budget and revisit it regularly

Establishing a formal budget, instead of a vague list of likely sales and expenses, is essential if you want to give your small business the best chance at success. But just setting a budget once isn’t enough; you need to revisit it regularly to reconfigure costs as your business changes and evolves.

Consistently coming back to your budget, whether fortnightly, monthly, or bi-annually, will help you better control financial decisions, as you’ll know exactly how much you can afford to spend versus how much you’re projecting to make.


No matter what type of small business you own, it will benefit from a budget. So, before the year gets into full swing, make sure to take the time out to create a solid financial plan and set yourself some reminders to reevaluate it on a regular basis.