Budgeting for Business
Rede – Gold Coast & Brisbane Accountants
Most business proprietors have business goals and aims in their mind. However, few prepare formal written and documented budgets of these goals and aims that can be used effectively in driving their business forward.
There is an old saying that if you don’t aim for anything, that’s exactly what you may well achieve – nothing!!
What is a budget?
A budget represents the setting of business goals, aims and objectives for a future period of time – perhaps for a week, a month, 3 months, a year and possibly even longer. There are many types of budgets. Most people assume they are just financially oriented (for example, sales, profits and cashflow). There are also many types of non- financial budgets that can be prepared, (for example, a business plan, customer contact and complaint performance, staffing numbers and production levels).
Business proprietors should be encouraged to set goals and objectives and budget into the future for their business. This provides targets and goals to aim for and achieve.
What are some of the most common types of budgets.
1. Cash flow budgets.
Recent times demonstrate that ‘cash is still king’ in business. A cashflow budget sets out likely cash inflows for the business (for example, sales revenues, capital injections, borrowings, sale of assets etc) and likely cash outflows (for example, owner drawings, business expenses, loan repayments etc) into the future. The data can be calculated for varying future time frames.
2. Profit Budgets
These budgets predict your likely business revenues and expenses and the resultant net profit. Once again different time frames can be adopted.
3. Sales Budgets
Depending on the type of business you are in, the objective is to predict potential sales revenues for a future specified period of time. For example, if you sell new cars, you might develop the budget based on the number of new cars you expect to sell and extrapolate revenue based on predicted sales prices.
4. Business Plans
Typically, they incorporate a combination of financial and non – financial data and information. The objective is to provide a current snapshot of where your business is at and develop a process to move it in a certain direction for future achievements. The plan is frequently updated.
These are but a few of the types of budgets available. There are many other sophisticated and less sophisticated types of budgets. You may be able to think of some that could benefit your business.
Is it difficult to prepare budgets?
At first it may seem a daunting task to prepare budgets. With the help from your experienced Gold Coast & Brisbane accountants you may be surprised at how manageable the task is.
If you aren’t budgeting in your business, call Rede – Gold Coast & Brisbane accountants now. You need Help.
Book a FREE consultation with Rede Gold Coast & Brisbane accountants online here or by calling 1300 399 599.