Budgets allow a company to accurately set goals, priorities, and spending caps, as well as detail where funding comes from and where new strategies may bring revenue into the company
Fremont, CA: The effectiveness of a business owner's planning process is critical to the success of a small business. Business budget planning, which is also one of the final stages of the planning process, is one of the most critical elements of the planning process. To begin, one must collect company financial data, forecasts, and industry analysis to assist one in developing one's business budget.
In order to build one's budget, one must consider the company's overall business and strategic plans, in addition to the valuable financial information and analytics.
Preparing Budget
Budgets allow a company to accurately set goals, priorities, and spending caps, as well as detail where funding comes from and where new strategies may bring revenue into the company. The line items that receive the most funding are high-priority items such as revenue sources and expense types. These items necessitate meticulous record-keeping and serve as performance indicators for the overall business strategy.
A good budget should break down revenue and expenses by month, quarter, or fiscal year. Depending on the size of one's company, separate budgets for each department should be included. These departmental budgets should also be broken down by month or quarter, and when combined, they will form one's master budget.
Businesses that rely heavily on seasonal sales revenue are an excellent example of why a budget is essential. If the months of June, July, August, and December typically generate 75 percent of one's company's revenue, having a budget will allow one to plan ahead. Having a plan in place for effectively distributing one's revenue over the course of a fiscal year will help one maximize profits.
See Also:
Business Continuity Companies
Business Management Review
