Budgeting is the first step of running a profitable business. A sample will give you the features of a budget and the need for a budget.
While we were in schools and colleges, we managed our expenses and met our ends, through the allowances we got. Obviously, there were times when we wanted an increment, but you can’t have your cake and eat it too. Budgeting follows the same logic, with which we manage our finances then.
Honestly, it is the art of distinguishing your needs from frivolous demands. Budgeting helps you to not only reserve your resources for the rainy day, but also gives you a structured guideline for future expenses.
Sample Business Budget Plan
Particulars Actual Budget Difference
Wages and Bonus
Amount Received from Debtors
Travel and Entertainment
Repairs and Maintenance
Loans and Creditors
Net Income/Loss (A-B)
Features of a Budget
A budget plan is meant to give you a statement of what you have earned and what you have spent.
Your money is important, and hence it must be accounted for. Many people forget to add the expenses made on stationery, transport, and postage. However, every penny spent from your kitty needs to be shown in the business budget.
Getting into the habit of making your budgets will go a long way in making your business a big brand from a small outlet.
It can include, interest earned and paid, cost of goods sold, taxes, rebate on bills discounted, investments made, advertising, bills payable, outstanding expenses, net profit or loss, reserves, and every possible monetary transaction.
Why is Budgeting Needed?
The foremost need of budgeting stems from your desire to earn a certain revenue. It will show you the area which needs more attention and control. This way, costing and cost control will be more efficient and effective.
With the financial data, you will be able to compare your business with other players in the industry. Budgets are great tools to make and analyze comparative cost advantages, break even points, marginal costing, inventory control, and scrutiny as per financial ratios. Budgeting will also help in categorizing items as fixed, variable, and semi-variable.
If you are well-versed with finance and budget planning, then go ahead and plan your business budgets. But, if numbers aren’t your cup of tea, then it’s safe to hire a financial expert. Making budgets and managing finances are his area of expertise, so it will be in your best interests to hire a professional.
There is never a point in placing a blame on the third party, once the milk has been spilled. A budget will always make you take calculated risks, where the potential of danger is known and the back-ups are ready. A budget keeps you goal-oriented, boosts your efficiency, and keeps you rooted to the reality.
The basic fact of budgeting is, it is ‘the first step for better times…is to imagine it’. It’s an estimate or a tentative predication of your incomes and expenses. The actual will always differ and hopefully on the up-side of it!