There are lots of articles and books written about budgeting even some great spreadsheet templates
available. Nevertheless, if you use the "compete with yourself" concept it's much easier. Of course you need to know what you should target as a percentage of sales for the main expenses, Payroll, COGS etc. Once you know where you want to be you need to figure out where you are. Now that you know where you are you can decide how to make things better versus last years performance - your competing with yourself, pretty simple! Set realistic annual goals, but remember to compare your current performance to last years and adjust to make it better. Most Importantly be certain to look forward at least 60 days for corrections that you can control for Variable expenses and Revenues because the business landscape changes. Remember Budgeting should be a Dynamic process, constantly changing what's controllable in the near future. Budgets should not be static - it's not cast in concrete. Only fixed expenses (Rent, Property Taxes etc.) are static and difficult to control.
For business owners who are new to formalized budgeting a great technique is called the "rolling 12 month" budget. To perform a rolling budget you need to forecast next years budget for the month that just ended, so you always have a rolling 12 month budget. For example when January ends for 20X1 use the actual numbers to forecast January 20X2, everything is fresh in your mind and it's the best time budget and forecast the future. This is a great way to get use to budgeting and learn to understand the ebbs and flows of your business. Remember compete with yourself and you'll always win -