It’s Budget Season: How SMEs Can Prepare for a Smarter, Stronger 2026

By Dave Costello, MBA, CPA

TCV Growth Partner:

Can you believe it’s already October 2025? That means it’s officially budget season—and if you’re running a small or medium-sized enterprise, now’s the time to roll up your sleeves and start planning for 2026. Whether you’re a seasoned entrepreneur or just getting your feet wet, building a solid budget isn’t just a financial exercise; it’s your roadmap for growth, resilience, and peace of mind. So let’s talk about how to do it right.

Why Budgeting Early Matters More Than Ever

Let’s face it: the business landscape is anything but predictable. Between rising costs, shifting regulations, supply chain hiccups, and the ever-evolving tech scene, 2026 is shaping up to be a year where agility and foresight will be key.

Waiting until December to start budgeting? That’s like trying to build a parachute after you’ve jumped out of the plane. Starting now gives you time to reflect, strategize, and align your financial goals with your broader business vision.

Step 1: Start With What You Know—Your 2025 Data

Before you forecast the future, take a good look at the past. Pull up your 2025 financials and ask:

• What were your biggest wins?

• Where did you overspend?

• Which months were most profitable?

• What unexpected costs popped up

  
  

This isn’t just about numbers—it’s about patterns. Maybe your energy costs spiked in the summer, or sales surged in Q3. These insights help you build a realistic baseline for 2026.

Step 2: Build a Flexible Forecast

Here’s the truth: no budget survives first contact with reality. That’s why flexibility is your best friend. Create multiple scenarios—best case, worst case, and somewhere in between. Consider variables like:

• Tariff changes

• Interest rate fluctuations

• Supply chain delays

• Energy price shifts

• New product introductions

• Impact of new competitors

• New marketing initiatives

  
  

Planning for different outcomes helps you pivot quickly when things change. It also gives you a buffer to absorb shocks without derailing your entire year.

Step 3: Categorize Your Costs Clearly

Not all expenses are created equal. Break them down into:

• Fixed costs: Rent, salaries, insurance

• Variable costs: Inventory, utilities, shipping

• One-time costs: Equipment upgrades, software purchases (some of these costs might go on the balance sheet rather than through the p&l – include in your cash forecast)

  
  

This clarity helps you manage cash flow more effectively and spot areas where you can trim fat or invest more strategically.

Step 4: Align Your Budget with Strategic Goals

Your budget isn’t just a spreadsheet—it’s a reflection of your priorities. Ask yourself:

• Are you planning to expand your team?

• Launch a new product?

• Invest in marketing or tech?

  
  

Tie your planned expenditures to a goal. That way, your spending supports growth instead of just maintaining the status quo.

Step 5: Don’t Ignore Tech and AI

Technology isn’t just for the big guys. AI tools can help you forecast more accurately, automate reporting, and even optimize energy usage. Budgeting for digital upgrades—whether it’s a new CRM, accounting software, or cybersecurity tools—can boost productivity and reduce long-term costs.

Step 6: Plan for Tariffs and Inventory Challenges

Global trade is still a roller-coaster. Tariffs can impact your cost of goods, and supply chain disruptions can throw off your inventory planning. Consider diversifying your supplier base and negotiating better terms now. It’s all about building resilience into your operations.

Step 7: Budget for Energy Efficiency

Energy costs can eat into your margins, especially if you’re in manufacturing, retail, or hospitality. Consider budgeting for upgrades like:

• LED lighting

• Smart thermostats

• Energy-efficient appliances

• HVAC improvements

  
  

These investments not only lower your bills but also boost your brand’s sustainability credentials.

Step 8: Factor in Tax and Regulatory Changes

With the new legislation that has been enacted, tax rules are shifting. Make sure your budget reflects changes in deductions, depreciation, and credits. If you’re unsure, consult your tax advisor or use accounting software that stays updated with regulatory changes.

Step 9: Automate Where You Can

Manual spreadsheets are prone to errors and take up valuable time. Modern budgeting tools can automate forecasting, track performance in real time, and even run scenario analyses. This frees you up to focus on strategy instead of data entry.

Step 10: Review and Adjust Regularly

Your budget isn’t a “set it and forget it” document. Schedule monthly or quarterly reviews to compare actual vs. projections. This lets you correct course early and avoid unpleasant surprises at year-end.

Bonus Tip: Get Buy-In from Your Team

Budgeting shouldn’t happen in a vacuum. Involve department heads, finance staff, and even HR in the process. Their insights can help you build a more accurate and inclusive budget. Plus, when everyone’s on the same page, execution becomes a lot smoother.

Final Thoughts: Budgeting Is a Mindset

Preparing your 2026 budget isn’t just about crunching numbers—it’s about setting intentions. It’s about being proactive, not reactive. It’s about building a business that can weather storms and seize opportunities.

So, take a deep breath, grab that coffee, and start planning. Your future self, and your bottom line, will thank you. If you would like a checklist to help you in preparing your 2026 budget send me a note to dave@tcv-growth.partners and I’ll be happy to send it to you.  If you need more help than the checklist, send me a note about that as well and we can talk about it!

Best of luck with your budget and results in 2026!