Business Budgeting 101

Budget A budget is a comprehensive, formal plan that estimates the probable expenditures and income for an organization over a specific period. Budgeting describes the overall process of preparing and using a budget. Since budgets are such valuable tools for planning and control of finances, budgeting affects nearly every type of organization—from governments and large corporations to small businesses—as well as families and individuals.

Intelligent budgeting incorporates a thorough business  review and analysis of past trends and data related to the business. This information assists a company in decisions relating to:

– running and growing operations
– the amount of money to be invested
– the type and number of employees to hire and
– the marketing strategies required

In budgeting, a company usually devises both long-term and short-term plans to help implement its strategies and to conduct ongoing evaluations of its performance. Although budgeting can be time-consuming and costly for small businesses, it can also provide a variety of benefits, including an increased awareness of costs, a coordination of efforts toward company goals, improved communication, and a framework for performance evaluation.

A small business generally engages in budgeting to determine the most efficient and effective strategies for making money and expanding its asset base. At the end of the day everything that happens within your business will be measured in terms of dollars.

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