Into The Lender's Mind #3 Budgeting mistakes that kill your business

A business is a pure strategy game.

My client was making these 4 budgeting mistakes

 Here's how we fixed them (and turned things around)

Earlier this year, a client in the automotive services sector approached me for funding. Apparently they had solid revenue and a loyal customer base. But when we dug into the numbers, it became clear: they were running in circles financially and growth had stalled.

Their issue wasn’t lack of opportunity.
It was their budget or rather, how they were using (and misusing) it.

Here are the 4 key budgeting mistakes they were making and exactly what we did to fix them.

1. They were using a forecast as a budget

They had projected £8M in annual revenue but when I asked for the supporting data, some was based on "if we land those two big fleet contracts." No signed deals. Just discussions around and some delays. Their entire budget was built around this assumption.

What we did:
We stripped the forecast down to actual, recurring revenue. Then, we created three budget scenarios:

• Base case (confirmed clients only)

• Expected case (likely renewals + conservative growth)

• Stretch case (if the big contracts landed)

This gave them a better understanding of where they were and where they could be.

2. They ignored seasonal cash flow dips

Like many in their industry, Q1 is slow but their budget spread revenue evenly across all 12 months. In reality, their cash dried up in February and March, forcing them to delay payments or dip into personal funds.

What we did:
We reviewed their past 3 years of cash flow month by month. Clear seasonal patterns emerged:

· Q1 is typically the slowest period as consumers are recovering from holiday spending and winter weather reduces foot traffic and discourages large purchases. Additionally, many buyers wait for new registration plates (March).

Cash flow can dip significantly in January and February.

· In Q2 market begins to pick up: March registration plate boost leads to used car part-exchanges in April/May and warmer weather and longer days increase consumer mobility and demand.

Recovery period with increasing revenue, but still some fluctuation.

· Q3 is one of the strongest quarters with summer holiday sales and clear-out of older inventory. September brings the second UK registration plate change, driving a spike in sales as buyers often plan purchases before school/work resumes.

High transaction volume, better margins, and good cash inflows.

·  Q4 is a mixed performance: October often maintains momentum from September but November and December slow down again due to holidays and year-end fatigue.

Somewhat inconsistent; good months for service/MOT work but weak on big-ticket sales.

So we:
Built a cash flow forecast tied to seasonal trends
Identified months where cash support (e.g., overdraft or invoice finance) might be needed
Arranged a revolving credit facility with flexible drawdowns so they could act quickly without reapplying for loans every quarter

3. They overestimated revenue and underestimated costs

Their projections assumed 30% growth with only a 5% increase in overheads. But they’d recently hired two senior staff, upgraded to a new garage unit, and highly increased their marketing spend. No real cost tracking.

What we did:
Audited every line of operational spending for the past 12 months
Identified 3 "cost creepers": software licenses, outsourced admin, and unnecessary ad spend.

We identified an £120k overspend with £35k wasted and adjusted revenue projections based on actual trends and cancels unnecessary expenses.

4. They had no budget for strategic growth

They wanted to expand into fleet servicing but had allocated zero budget for training, new equipment, or marketing the new service.

What we did:
Carved out 8% of projected revenue and created a “strategic growth fund”
Helped them apply for an equipment finance facility to cover upfront tooling costs
Allocated a specific marketing budget with performance targets

They managed to fund for growth they wished for.

What we have achieved:

• Their budgeting now supports their business strategy

• They secured a £150K working capital line (based on their realistic forecasts)

• They very close to launch their new fleet service offering early next year

•  They’ve already improved profit margins by 6% in just 6 months

Your takeaway

Budgeting on spreadsheets without purpose, clarity, control, and credibility is just noise.
When your numbers align with your strategy, investors and lenders take notice and growth becomes much more predictable.

📌 Your Action Step:

Open your latest budget. Ask yourself:

• Does this reflect reality or just hope?

• Have I planned for seasonality?

• Is my growth strategy funded or unfunded?

What to read about 7 general budgeting mistakes I’ve seen while working with 400+ businesses? Read on LinkedIn.