Stage 4 · Run the company

Budget vs Actual Variance Calculator

Variance, favourable or unfavourable, and which lines need an explanation for your board.

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Please note. This tool is for education and planning. It gives estimates, not financial advice. Results are estimates based on what you enter. Full disclaimer · How we build the numbers

What this tool does

Variance analysis compares what you planned with what happened, line by line, and tells you which differences are worth explaining. It's the core of a monthly board or investor report.

How to use it

Set your two flag thresholds: a percentage and an amount.
Enter budget and actual for each revenue and cost line.
Read which lines are flagged and write one sentence for each.

The maths, in plain view

Variance = Actual − Budget
Variance % = Variance ÷ |Budget|
Favourable = revenue above budget, or costs below budget
Flag = |Variance %| ≥ threshold AND |Variance| ≥ amount

A worked example

Subscription revenue $2.2k under budget is -7.2%: unfavourable, but under a 10% threshold so not flagged. Paid marketing $2k over budget (+25%) and R&D salaries $9.5k under (-22.9%, a hire that moved) are both flagged.

Tips

Explain the cause, not the number: 'Designer start moved from June to July' beats 'R&D under budget'.
Look for timing vs real variances. Timing ones reverse next month; real ones change the forecast.

Want the full story? Read How to build a 13-week cash flow forecast and use it every Monday.

Questions people ask

What is a favourable variance?

A difference that helps profit: revenue higher than budget, or costs lower than budget. Unfavourable is the opposite.

What variance threshold should I use?

Many startups flag lines that miss by more than 10% and by more than a fixed amount (often $1-5k) so small lines don't create noise. Pick thresholds your board agrees with and keep them stable.

How often should a startup do budget vs actual?

Every month, once the books are closed, usually within 7-10 days of month end. Quarterly, roll it into the board pack with a reforecast.

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