What a budget is for
Not prediction — allocation. A monthly budget forces you to decide, in advance, what each dollar of revenue is allowed to do. The value is in the constraints, not the spreadsheet.
Benchmarks worth knowing
For ecommerce and small retail, COGS typically runs 35–45% of revenue, payroll 15–25%, rent 5–10%, marketing 8–15%. If one line is far outside its band, that is the conversation to have — not the total.
Reading the percentages
- Total expenses above 90% of revenue leaves no buffer for a slow month
- Marketing below 5% usually means growth is being starved
- Payroll above 30% suggests either a service model or a productivity problem
- Compare this month to the same month last year, not last month
Where budgets fail
Owners build a budget, then spend outside it without reallocating. The fix is simple: whenever a line is exceeded, another line must be cut in the same week. Otherwise the budget is decoration.
Frequently Asked Questions
Should owner's pay be in payroll?
Yes — put a market salary in payroll and treat distributions separately.
How often should I rebuild it?
Monthly reforecast against actuals; full rebuild quarterly.
Does tax belong in the budget?
Put an estimated tax line in 'other' so profit is not overstated.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
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