November 21, 2018

Are you working to a budget ?

Budgets are not just for large firms. Every business can benefit from creating a budget. They can benefit further from using that budget to plan cash flow and monitor progress.

 

Tax return sooner rather than laterWhen you sit down to create a budget you validate the overall strategy for your business. If you have not written down your plans, it may be that creating the budget forces you to actually deicide what you are trying to achieve and then, if you have the resources to do it. One critical resource is manpower. Although you can take on more staff or freelancers to help out, they will need training which will divert other members of staff from their primary staff. This is not a problem, providing it is built into the plan.

 

The other resource to consider is cash. Can you afford to buy the stock to fulfil your projected orders? This leads me nicely to propose that, following the preparation of a budget, you should also prepare a cash flow. As with all plans, if you know there are going to be times where cash is tight, it is not a problem if it is part of the plan.

 

Having created your budget and planned your cash, the next stage is taking action, and then monitoring. There is little point preparing a budget if it sits on the shelf. I am a strong believer in working with businesses to create their budgets. If they know how the projections were arrived at, they can validate them as they go, and have the understanding to update them if needed.

 

The title of this was not do you have a budget, but are you using the budget you prepared. What is your answer?

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