Danny Pritchard
October 14, 2026
Most small business owners know they should have a financial plan. Very few have one they actually use.
It's not because they don't care. It's because "financial planning" sounds like a 40-tab spreadsheet that takes a week to make. So it goes on the later list.
Here's the good news. A financial plan for a small business doesn't need to be big to be useful. It needs to be honest, built on your real numbers, and short enough that you'll look at it again next month.
So we’ve written this blog to help you create a simple 7 step plan that you can work through in an afternoon, using what's already sitting in your Xero. (If you want the bigger picture first, like setting 1 to 3 year goals and working backwards from the life you want, read our no-nonsense business financial planning guide for NZ owners. This one is about getting a working plan on paper.)
A business financial plan is a simple picture of the next 12 months: what you expect to sell, what it will cost you, what's left for you, and when the cash actually moves.
That's it. It's not a budget (a budget just lists spending) and it's not your annual accounts (those tell you what already happened). A plan sits in the middle. It takes what you know about your business and turns it into realistic targets you can use to steer your business.
If you're creating a business plan for the bank or an investor, the financial plan is the part that proves the rest of it adds up. If you're not, it's the part that stops you making big calls on gut feel alone.
Don't start with a blank page. Start with the truth.
Open Xero and run a profit and loss report for the last 12 months, split by month. You're looking for three things: total sales, what it cost to deliver those sales, and everything else you spent.
Splitting it by month matters. Most businesses aren't flat all year. Trades slow down over Christmas, retail spikes in November and December, hospitality fluctuates with the weather. Your monthly pattern is the backbone of your plan.
If your books are a bit of a mess, that's fine. Rough and real beats perfect and imaginary. Just note where you think the numbers are off so you can clean them up later.
This is the step most owners skip, and it's where the clarity actually comes from!
Put every cost you just pulled in step 1 into one of three buckets:
Direct costs. Anything that goes up when you sell more. Materials, stock, subcontractors, the wages of people who deliver the work.
Overheads. The costs of keeping the doors open whether you sell anything or not. Rent, vehicles, insurance, software, admin staff, accounting.
You. What you pay yourself. Give this its own line. If you've been taking "whatever's left", put in what a fair wage for your role actually is.
Xero shows your gross profit on the Profit and Loss report (sales minus anything coded as a direct cost). Divide that by your sales and you've got your gross margin, which tells you how many cents you keep from every dollar you sell before overheads. One catch: Xero is only as good as the coding you’ve set. If delivery wages or subcontractors are sitting in overheads, your margin will look healthier than it really is, so check your buckets first. It's the most important number in your plan, and plenty of owners have never looked at it properly.
Your break-even is the sales you need just to cover your overheads and your own pay. Below it, you're going backwards. Above it, you're making profit.
The maths is simple:
Overheads + your pay ÷ gross margin = break-even sales
Divide that by 12 and you've got your monthly break-even. Stick it on a post-it note. It will change how you think about a quiet month, a discount, or a "small" new expense.
Now look forward. What do you want the next 12 months to look like?
Pick realistic sales targets for each month, using last year's pattern as your guide. Then decide what you want to change. Most of the time, the biggest levers are:
- Lifting your prices or your margin
- Selling more to the customers you already have
- Cutting work that keeps you busy but doesn't pay
Be careful with wildly optimistic sales targets. Hope is not a strategy. A plan built on a realistic year, with a stretch goal on top, is far more useful than one that's out of date by February.
Every business has a list of "maybe this year" decisions. Hire someone. Buy the second van. Spend more on marketing. Move into a bigger space.
Put each one into the plan with two numbers next to it: what it costs, and what it has to bring in to pay for itself. A new hire costing $70k a year, at a 45% margin, needs to help bring in around $155k of extra sales just to break even.
That's not a reason to say no. It's a reason to know exactly what "yes" has to deliver. This is the step that turns your financial plan from a document into a decision-making tool.
Profit on paper and cash in the bank are two very different things. A plan that works on paper can still leave you short if the money lands in the wrong order.
Map out the months when big cash hits are coming. In NZ that usually means:
- GST returns, typically due on the 28th of the month after your period ends (with 15 January and 7 May the exceptions)
- Provisional tax instalments, which for most March balance date businesses fall on 28 August, 15 January and 7 May
- PAYE, ACC levies, insurance renewals and annual subscriptions
- The Christmas and New Year slowdown, when your costs keep going but your sales often don't
Then plan to set money aside as you go, so tax day is a non-event instead of a scramble. If cash timing is the part that keeps you up at night, our cash flow management guide goes deeper.
This is the step that makes all the others worth doing.
Once a month, sit down for 30 minutes (make yourself a tea / coffee / matcha so it’s something you look forward to doing) and compare the plan to what actually happened. You only need to look at a handful of numbers:
- Sales vs target
- Gross margin
- Overheads vs plan
- Cash in the bank and what's coming up
- What you paid yourself
Where you're off, ask why. Then adjust. A plan that never gets reviewed slowly stops being true by about week six. A plan you check every month gets more accurate, and more useful, every time.
Here's a simple financial plan example to show you how it all fits together. Meet our theoretical plumbing business ‘Pipes Galore’ that turned over $900k last year.
Where they are now
Direct costs (materials, subcontractors, tradie wages) run at 55% of sales, so the gross margin is 45%. That's $405k of gross profit.
Overheads (vans, insurance, software, admin, rent) come to $220k, and the owner pays themselves $130k. Total: $350k.
Profit: $405k minus $350k leaves $55k. Break-even sales: $350k ÷ 45% is about $778k, or roughly $65k a month.
What the plan says for next year
The owner wants to take on an apprentice and add a van (an extra $45k in overheads), and grow sales to $1m. They also review their pricing and how they quote, lifting the gross margin from 45% to 48%.
Gross profit at $1m and 48% is $480k. Costs are now $395k ($265k overheads plus $130k for the owner). Profit lands at $85k, up from $55k, and the new break-even sits around $823k, or $69k a month.
Here's the interesting bit. That 3% margin lift is worth $30k on its own. The extra $100k of sales, at the old margin, would only have added $45k of gross profit while bringing more work, more stress and more cash tied up in jobs. The plan shows the owner exactly where the easier money is.
That's what a good business financial plan does. It doesn't just tell you where you're going. It shows you which levers matter most. Remember you can put the above into a spreadsheet or make it visual depending on your style.
A few traps we see good business owners fall into:
Leaving your own pay out. If you're paid last, you haven't built a business, you've built a job with extra risk.
Planning around tax instead of profit. A smaller tax bill is nice. A smaller business isn't.
Ignoring margin. More sales at a thin margin often means more work for the same money.
Set and forget. The plan is only as good as the last time you checked it.
You can absolutely build a first plan on your own using these seven steps. But if you'd rather have someone in your corner who knows the numbers, asks the awkward questions, and helps you stick to it through the year, that's exactly what we do.
Danny and Amy (our business advisors) work with NZ owners every week to turn real numbers into a plan they can actually steer by, then sits alongside them as the year unfolds.
Build your financial plan with Bring On Monday. Book a free 20-minute call and we'll help you map out the next 12 months, one workable step at a time.
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