Budget
What is it?
A budget is a financial plan for future activities. It’s an estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals.
What is a budget useful for?
- It helps management to decide which activities it will undertake and how the company’s resources will be used.
- It assists in controlling the actual costs, as managers know that the actual costs of their activities will be compared to the budget.
- It is a plan of action for achieving quantified objectives.
- It is a standard for measuring performance, and to explain the variances when they occur.
- It is a device for coping with foreseeable adverse situations
We do it
Our practice on business budgeting in a large corporation has shown that we could not run the business without a real control tower over it, to check if it’s on the good way. We also ended up admitting that it was not a simple task. Estimating a cost line or forecasting revenue could be a hard task without some tools that are acquired through experience only.
