We constantly hear the term budget from financial service providers; we use it many times on far too many instances - in household finances, business cashflows and various government offices. But fact is, having a very basic understanding of this financial accounting term won’t do it any justice. In order to serve its real purpose and to use it in the right context, you must first have a clear understanding of business budgets: why do you need a budget, when do you develop your budget and what should it include? Read on to get the facts straight.
The Value of your Business Budget
A budget sets the structure by which your can build your business financial foundation. With a well-devised budget plan in place, you can seamlessly strategise how and where to spend your money based on a close estimate of your actual business expenses. Done correctly, your budget will thus serve as a basis as to how well (or how poorly!) your business has performed over a given period.
That said, can you imagine how tumultuous a business can get if it doesn’t have a clear budget plan? It would be difficult to manage your business finances, control your spending or stash some cash in case of a sudden economic downturn.
Develop a Business Budget Today
Generally, a business budget will be very useful regardless of the current phase of your business. But as far as the experiences of seasoned and successful entrepreneurs go, a budget is of utmost importance when you are formulating your business plan. This is further supported by the fact that budgeting at the business planning phase effectively determines the viability of your financial goals. Likewise, calculating close-to-accurate predictions work well in anticipating possible cashflow difficulties as well as in providing solutions to these looming business financial concerns.
Your Actual Budget Plan
While there are a number of factors to consider when you are putting together a business budget, your primary concern is usually more inclined towards these figures:
- the overhead costs of your startup business;
- the expenses associated with the production, marketing and distribution of goods;
- and the profit you are expecting to generate
Knowing about these things and having a clear idea as to the best execution strategy for your budget plan is a good way to jumpstart your business budgeting initiatives. It puts the entirety of your business financial goals in the proper perspective, thus making it easier to spend your resources wisely.
Make more strategic business financial decisions by having a business budget in place. Get in touch with our qualified advisers at D&V Philippines today for more advanced finance and accounting services.