First of all to budget in business you should have a “Personal Survival Budget” in place.

What’s your minimum survival budget?

Furthermore remember very few businesses make enough money in the formative years. So in order to find out how long you can continue trading, establish what your minimum survival budget is. Also look at how much money comes into the household excluding what you can make from your business.

Likewise, if your monthly outgoings are £1,000 and the monthly income excluding your earnings are £700 then you need to take £300 per month to keep going.

Plan a contingency allowance

So if you think it might take 3 months before your business will generate that level of income, you will either need a cash reserve of £900 (or to borrow it) in order to survive that 3 months. Also don’t forget it often takes longer to build up trade than expected. Therefore it would be sensible to plan a contingency allowance for added time rather than finding yourself in a position of unplanned debt. Use the excel spread sheet on your disc to calculate your survival income.

Many businesses know the importance of adequate cash flows, and the role it plays for business survival, growth and prosperity. It’s is required, to pay our staff, suppliers, bills, the banks, and to invest in projects.  It’s the financial life-blood of your business. Because insufficient or inadequate control of cash is one of the primary reasons for business failure. So as part of the business planning process, establish what your Personal Survival Budget figure is.

Understanding what your monthly financial survival level, i.e. how much you need each month to live on is vital. The Personal Survival Budget will tell you if you have enough to survive, how much you need to take (draw down) from the business. 

Personal survival budget

This will show you the minimum amount you need to take out of the business to contribute to your household budget.  It is based on how much you need to survive, to keep your head above water with the lifestyle you have set yourself.  The key is to look at household income and expenditure. Look at income coming into the household from employed work, household benefits, income from any other occupants. Also at outgoings such as rent/mortgage, bills, food, car running costs, going out, holidays etc. 

Your business must generate this ‘Personal Survival Budget’ level of income to sustain you. If it doesn’t other options have to be considered.  You may see this as being pessimistic, realism is a better description. 

Evaluate business needs

At the start of your business journey you may need to consider if you continue working, run your start-up business ‘part time’, throw yourself into it full time and look for additional income. As time goes on, the business may be investing, hit a rocky patch, be hitting turbulent waters. As a result you may need to consider things such as income from part time work, addressing household expenditure, personal overdrafts.  Whatever you decide, evaluate what the business needs to provide you with to achieve your minimum survival budget. Factor this into your business plan and cash forecasts.

Preparing and using a Personal Survival Budget, as for business planning is a case of ‘forewarned is forearmed’.  A Personal Survival Budget should be maintained, even when even if everything is going great and you have no money worries.

The business ultimately provides the income to maintain and support your life style, life and business financial circumstances change, so the Personal Survival Budget and Business Budget are inexorably linked

If you would like us to help you with capturing, connecting with, and using your business numbers then please contact us. We can have a cup of (virtual or real) coffee, biscuit and a chat as to how we can help.

We’ve created a great Budget template to help you figure out your Personal Survival Budget – contact us at to receive your free copy!