Sure, you have a bright business idea, and your ducks are in a row. But have you planned your budget for your business? Read more…
Running a business venture requires industry knowledge, optimism, enthusiasm, capital, and budget. For a business, to be successful- it is necessary to prepare and manage budgets, review business plans, monitor finances and business performance on a regular basis.
Budget helps in identifying available capital, provides expenditure estimation and predicts the upcoming revenue. Referring to the budget helps businesses in measuring results against expenditure, facilitates business owners to focus on cash flow, propelling business growth.
Business managers should consider budget for putting business plan to action. While they align priorities and goals for the business for the year, the budget helps in allocating financial resources to achieve the set targets.
“An ideal business budget should include all source of revenue, foreseen by a firm along with all potential expenditures the company might make during a given time period.”
Components of a business budget:
- Estimated Revenue- Cost of goods sold, services rendered & more
- Fixed Cost- Rent, Salaries, Internet service, salaries & more
- Variable Cost- Cost of raw materials, distribution channels, production labour
- One-Time Cost
- Cash Flow
- Profit
7 Benefits of Budgeting every business should know:
- Planning is the key for long-term success
Every company has long-term financial goals and objectives to achieve. By creating budget, organisation can think of achieving long-term goals without being stuck in day-to-day routine and plan strategically.
- Leave the guess game behind! Get a reality check on Financials
A well-structured budget helps businesses figure out the cash flow analysis, expenses to reduce on and profitable investments!
- Periodic re-evaluation of assumptions to ensure future profits
You may have a different set of assumptions when you started your biz. Reviewing the assumptions regularly will ease the revenue forecasting process basis current business condition.
As per a study by CBinsights, a few of the leading reasons why businesses fail include pricing issues and running out of cash, which can be prevented by having a well-planned budget.
- Align employees towards achieving the common mission
Work with your team to help them setting up goals considering the budget. Communicate clearly, provide them continuous guidance and the resources they need to sail through.
- Planning for business funding is necessary too!
In order to operate, businesses rely on cash- which requires budgeting to know how much money can be invest and spend. Budgeting, if done effectively, will help the finance team to keep excess money in long-term or short-term instruments.
- Right Allocation of Cash
Figure out which assets your business should invest in. Businesses need to identify the cash allocation to determine which assets are investment worthy.
- Identify the bottlenecks
While budgeting, a company analyses the money flow and may notice any bottleneck like a project or department is consuming more money than it is generating. Businesses can use the budgeting period to decide to either work around the problem or increase the capacity of the bottleneck.
Businesses invest effort and time in creating realistic budgets since it is an effective way to track the level to which a business has met its goals. It helps organizations in predicting cash flow and identify the areas that need improvement and run business operations smoothly.
Looking for Financial Experts to help with budget planning? Your search ends here!
At Sapphire Info Solutions, our team of professionals provide budgeting services for our clientele so they can focus on their business. Get in touch with Sapphire’s team today and make budgeting easy.
Sapphire Info Solutions is one of the early adopters of cloud computing. Apart from using all cloud-based accounting systems such as SAGE, IRIS, QuickBooks etc., they have hosted their in-house job-portal on the cloud enabling greater productivity & customer satisfaction. Sapphire Outsourcing is pioneer in adopting new technologies to help you achieve digital transformation in your accounting department.
