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Budgets serves as vital part of any running business resourcefully and efficiently. They act as an estimate of income and expenditure for a set period of time.
Advantages
· It helps to allocate and use resources within the organisation and also monitor and control operations.
Disadvantages
Although budgets are purely forecast there are chances of errors and inaccuracies since it is impossible to predict the future. Lot of socio economic political factors like rising energy prices or the global recession may distort the whole process.
When you're running a business, it's easy to get bogged down in day-to-day problems and forget the bigger picture. However, successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance.
Structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving profits, reducing costs and increasing returns on investment.
In fact, even without a formal process, many businesses carry out the majority of the activities associated with business planning, such as thinking about growth areas, competitors, cashflow and profit.
Converting this into a cohesive process to manage your business' development doesn't have to be difficult or time-consuming. The most important thing is that plans are made, they are dynamic and are communicated to everyone involved. See the page in this guide on what to include in your annual plan.
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