New small business owners may run their businesses in a relaxed way and may not see the need to budget. However, if you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cashflow, allowing you to invest in new opportunities at the appropriate time.

If your business is growing, you may not always be able to be hands-on with every part of it. You may have to split your budget up between different areas such as sales, production, marketing etc. You'll find that money starts to move in many different directions through your organisation - budgets are a vital tool in ensuring that you stay in control of expenditure.

A budget is a plan to:
  • control your finances
  • ensure you can continue to fund your current commitments
  • enable you to make confident financial decisions and meet your objectives
  • ensure you have enough money for your future projects
  • It outlines what you will spend your money on and how that spending will be financed. However, it is not a forecast. A forecast is a prediction of the future whereas a budget is a planned outcome that your business wants to achieve.

Benefits of a business budget
There are a number of benefits of drawing up a business budget, including being better able to:
  • manage your money effectively
  • allocate appropriate resources to projects
  • monitor performance and meet objectives
  • improve decision-making
  • identify problems before they occur - such as the need to raise finance or cashflow difficulties

Budgeting and Planning
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