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What is a budget and why do I need one?

Monday, November 26, 2018
By Cheryl Sharp
What is a budget and why do I need one?

Simply put a budget is a road map of getting your business from A to B.  It will show you where your business is productive, and not so productive, so changes can be made, resources moved or invested.

Key benefits of a budget are:

-      It provides clarity and creates focus

-      It provides clear targets for your business – sales and spending

-      It is a roadmap to achieving your goals

-      You can anticipate any future problems and make improvements

-      It allows you to effectively control your cashflow

-      It keeps your spending on track

Whether you’re a start up or established business a budget will help with your business journey.

Start-ups

Owning a business will cost you money before it has even started trading.  A comprehensive budget will ensure your focus is in the right direction, cost-related decisions have firm financial backing and you have the confidence required to continue on your journey.

Established businesses

Are you growing?  Are you using all your available resources in the correct manner?  Are you seasonal?  A budget will help answer all these questions and provide clarity and focus.  A budget will help establish the sales required (clear targets) to achieve your financial goals and grow your company.

Other budget benefits

Once your business has set a budget it can then be used on a monthly or quarterly basis to assess where you are financially.  Monthly, or quarterly, management accounts compare budget to actual and shows where your business has achieved, exceeded or under performed.  Your budget can then be tweaked to allow for this and focus can be maintained.

If you want more certainty in your business let’s talk together about your future – visit our forecasting page to start your future today!