Forecast Budgeting

Accounting has helped many business owners understand their numbers, make more money, save tax and time, and improve their mental well-being.

Why is budgeting so essential for businesses?

1.   
Planning. “A goal without a plan is just a wish.” In order to achieve success, you need to have a plan, and a clear path towards your end
goal to ensure you achieve it.

2.   
Control. As a business owner, you need control as it helps you to achieveyour objectives. At predetermined times in the future, you need to know what
your planned activities and expenditures are. Then you can also monitor and measure against the expectations you have set – if things don’t go according to plan, then you have the knowledge and therefore the power to make decisions and take action to improve that. So it is imperative to be in control over the amount of money your business is spending.

3.   
Decision making. You need to make decisions over what you should be investing your funds in, and what you need to address and focus on, and make decisions over whether something is working or not. You can only do that when you monitor and measure your expectations against reality. Any decisions that you make are enhanced dramatically when you have a budget and a plan that you can use to monitor against.

4.   
Motivation. If you are setting a budget for yourself and your team, if you are planning ahead, then as a part of that process you will be setting targets. If those targets are reasonable, i.e. not out of reach but at the same time not too easy, then you are going to be motivated by participating in the
establishment of your own budget to help achieve those goals.

5.   
Allocation. Where do you use your resources? Where do you put your investments? Where do you spend your money in order to achieve your end goals? This is where embracing a budgeting process is vital. It will crystallise where you most effectively spend your budget, for example on personnel, marketing, and so on.

6.   
Well-being. We are much more effective both at home and at work when our stress and anxiety levels are reduced to a minimum. This can only happen when there is a bit more certainty and clarity over what lies ahead. For most people, stress is exacerbated when they don’t know what’s around the corner as they have no plans in place. Therefore, engaging in the budgeting and planning process will enable you to get a better handle on the situation, and better prepare you for any potential surprises.

7.   
Communication. The process of putting a budget together means that as a business owner you will need to have conversations with your team members and possibly with your customers to find out what their plans are, or what you might be offering them. The people involved in your business will then get to understand what your mission statements are, your aspirations, what you want to do and who is responsible for what.

8.   
Risk management. By looking into the future landscape and considering what it might hold, you can mitigate and manage any potential risk. There is nothing worse than being reactive in business, and reacting to things as they occur. If you are budgeting, you are therefore going to be planning for different options and scenarios. You can anticipate, identify the major obstacles, the major forks in the road, and the obstacles in front of you, and then make steps to try to plan for them and mitigate them. So as a risk management device, budgeting is extremely powerful.

If you would like to see how Budgeting and Forecasting can take your business to the next level, get in touch with DabHand Accounting today for a free consultation.