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A complete business budget includes: Revenue projections (by product/service line), Cost of Goods Sold, Operating Expenses (rent, salaries, utilities, marketing, insurance), Capital Expenditures, Debt Payments, Tax Provisions, and a Contingency Reserve (typically 5-10% of total budget).

Variance analysis compares budgeted amounts against actual results. Favourable variance = actual revenue higher or expenses lower than budget. Unfavourable variance = actual revenue lower or expenses higher. Regular variance analysis (monthly) helps identify problems early and adjust plans.

Start with historical data (last 2-3 years of actuals). Adjust for known changes (new hires, price increases, expansion plans). Use conservative revenue estimates and generous expense estimates. Include seasonal variations. Review with department heads. Build in a contingency buffer.

Zero-based budgeting (ZBB) starts from zero each period — every expense must be justified from scratch, not based on previous budgets. It prevents budget creep and eliminates wasteful spending. It's more time-consuming but ensures every dollar has a purpose.