Part 1 of a 4-Part Series on Budgeting for Control

Why Budgets Matter More Than Ever for Independent Grocers

It is trade show and share group season for many independent grocers across the U.S., and FMS is often invited to share industry data during these sessions. One question consistently sparks discussion: How many operators prepare an annual budget?

The response is often surprising. In recent informal polls, fewer than one in five attendees reported preparing a formal budget. This comes at a time when the 2025 FMS/NGA Independent Grocers Financial Study shows average net profit for independents at less than 2 percent.

When Margins Are Thin, Planning Matters

When operating margins are this thin, financial planning becomes critical. The gap between profit and loss is narrow, and small misalignments between sales expectations and expenses can quickly erode results. A budget helps connect a sell plan to the expense structure that supports it and provides a foundation for meaningful KPIs, giving managers and stakeholders clearer insight into how daily decisions affect the bottom line.

Why Many Grocers Have Operated Without Budgets

Many independent grocers operate without a formal budget, and that is not unusual. For years, experience, instinct, and historical patterns were often enough to guide decisions. In more stable environments, that approach worked.

Today’s environment is different.

Today, conditions are less predictable. Margins are tighter. Labor costs remain elevated. Inventory and demand shift faster. Small misses add up faster, and there is less room to recover later. In this landscape, the absence of a budget limits not only planning, but visibility and control.

Why Operating Without a Budget Is Riskier Today

Without a budget, it becomes harder to:

• Evaluate whether results are truly on track or quietly slipping
• Separate normal fluctuation from real problems
• Identify issues early, while adjustments still matter
• Make decisions with confidence, supported by clear financial context

Month-end reports may still arrive, but without a plan to compare against, the numbers are easier to explain than act on.

What a Budget Really Does

A budget is not a prediction or a guarantee. It does not eliminate surprises. What it provides is context. A useful budget helps answer practical questions:

• Are we ahead or behind expectations?
• Where did performance change?
• Which areas need attention now?

This turns financials into decision support rather than historical reporting.

Starting Small Still Counts

A budget does not need to be perfect or complex to be valuable. Even a simple framework focused on margin, labor, and shrink creates clarity. The goal is not precision. It is visibility.

Independent grocers do not need budgets because conditions are bad. They need budgets because conditions are uncertain. A clear plan provides a place to steer from, even when the path ahead shifts.