A budget is a plan expressed in quantitative, usually monetary terms, covering a specific period of time, usually one year. A budget is a systematic plan for the utilization of human and material resources. In a business organization, a budget represents an estimate of future costs and revenues. Budgets may be divided into two basic classes: Capital Budgets and Operating Budgets.
Budgeting and forecasting are vital in maintaining control of your business, but it can be a time consuming task as budgets must be continuously updated with new forecasts becoming the targets to achieve.
To be competitive, small business owners must plan and prepare for all future events and market changes. Possibly the most important aspect of preparations is effective cash flow planning. Failure to properly plan cash flow is one of the leading causes for small business failures.
A healthy cash flow is an essential part of any successful business. Some business people claim that a healthy cash flow is even more important than your business's ability to deliver its goods or services. That may be placing a bit too much importance on your cash flow, but consider this: if you fail to satisfy a customer and lose that customer's business, you can always work harder to please the next customer, but if you fail to have enough cash to pay your suppliers, creditors, or your employees, you're out of business! Proper management of your cash flow is a very important step in making your business successful.
A business plan precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.
There are vast benefits to companies which follow accounting, budgeting and forecasting processes. Budgeting and forecasting allows you to identify the goals and objectives of the organization from sales, margins, employee, and cost levels. Companies will also be better equipped to plan their projects in accordance with a specific budget. Budgeting and forecasting models are essential for company growth. Models help organizations establish and evaluate expectations for goals, sales margins, employees, and cost expectations.
DeSmidt Consulting Inc. has extensive experience helping businesses set targets, prepare budgets and measure performance. We can fine tune budgets and forecasts on an ongoing basis and prepare periodic variance reports comparing the actual results to the budget plans.
Our forecasting and budgeting services include: