New small business owners may run their businesses in a relaxed way and may not see the need to budget. However, if you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cashflow, allowing you to invest in new opportunities at the appropriate time.
If your business is growing, you may not always be able to be hands-on with
every part of it. You may have to split your budget up between different areas
such as sales, production, marketing etc. You'll find that money starts to move
in many different directions through your organisation - budgets are a vital
tool in ensuring that you stay in control of expenditure.A budget is a plan
to:
·
control
your finances
·
ensure
you can continue to fund your current commitments
·
enable
you to make confident financial decisions and meet your objectives
·
ensure
you have enough money for your future projects
It
outlines what you will spend your money on and how that spending will be
financed. However, it is not a forecast. A forecast is a prediction of the
future whereas a budget is a planned outcome of the future - defined by your
plan - that your business wants to achieve.
Benefits
of a business budget
·
manage
your money effectively
·
allocate
appropriate resources to projects
·
monitor
performance
·
meet
your objectives
·
improve
decision-making
·
identify
problems before they occur - such as the need to raise finance or cashflow
difficulties
·
plan
for the future
·
increase
staff motivation