How to Create Your First Startup Budget
Salaries are 70 to 85% of it. Everything else is noise you will spend three weekends optimising. A budget you can build in an afternoon, with real numbers.
A first startup budget is not a financial model. It is a list of what leaves your bank account every month, and how many months you can keep doing that.
You can build it in an afternoon on one sheet. Anything more elaborate at this stage is procrastination with formulas.
The shape of it
For nearly every early startup in India, the split looks like this:
| Line | Share of spend |
|---|---|
| Salaries, founders included | 70% to 85% |
| Workspace | 6% to 10% |
| Software, cloud, tools | 3% to 8% |
| Accounting and compliance | 2% to 4% |
| Everything else | The rest |
Read that table again, because it decides where your attention goes. If salaries are 80% of your spend, an afternoon spent switching project tools to save ₹4,000 is an afternoon wasted. One hiring decision moves more money than every software subscription you will ever cancel.
Build it in four steps
1. Write down every salary, including yours. Gross, not take home. Add roughly 12% on top for provident fund and the employer's share of costs once you are past the thresholds.
2. Add the fixed monthly stuff. Workspace, internet, accounting, software. These are dull, predictable and easy.
3. Add a line called "things I have not thought of" at 10%. You have not thought of them. That is the point. Laptops break, a lawyer is needed, someone flies to meet a customer.
4. Multiply by 18. That is what a year and a half costs. Now compare it with what is in the bank.
A real example, three people
Two founders on ₹50,000 each, one employee on ₹70,000, three desks in a coworking space:
| Line | Monthly |
|---|---|
| Salaries | ₹1,70,000 |
| Three seats at ₹8,499 | ₹25,497 |
| Software and cloud | ₹12,000 |
| Accounting and compliance | ₹8,000 |
| Buffer at 10% | ₹21,550 |
| Total | ₹2,37,047 |
Eighteen months of that is ₹42.7 lakh. Add laptops and setup at ₹3 lakh and you are at ₹45.7 lakh. That is the number, and it took ten minutes.
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The two mistakes we see most
Founders leave themselves out. If you are not paying yourself, write down what you would need to be paid, and note how long your personal savings last. That is a real constraint on the business and pretending otherwise ends badly.
Everyone budgets the fun things and forgets the boring ones. Audit, filings, professional fees. A private limited company costs ₹40,000 to ₹1,50,000 a year in compliance before anything interesting happens.
Review it monthly, and only monthly
Once a month, on a fixed date, put actual spend next to the budget. Not daily. Not never. The point is to catch the line that has quietly doubled, and one hour a month is enough to catch it.
Once your budget exists, the next number is how long the money lasts. That is runway, and it is worth understanding properly.
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