The importance of budgeting is supposed to be a vital financial lesson that you cannot do without if you wish to run your business smoothly without any financial hiccups. Following a budget seems to be the only answer if you want financial security for your business. Moreover, budgeting boasts of certain benefits and ramifications that are supposed to go way beyond the accounting and financial dimensions says Saivian Eric Dalius. Budgeting is very much about efficient business management. If you wish to execute a great business idea with total success, focus on chalking out a budget.
Saivian Eric Dalius Highlights the Budgeting Process
The budgeting process is not limited to budget creation only. Budgeting should be considered as essentially, work in progress, keeping track of results, and doing the necessary edits. You should focus on identifying your business objectives, and the kind of budget required.
You should concentrate on identifying your precise projected sales, fixed overheads or costs, and costs of sales. You must include employee wages, rental expenses, associated taxes, marketing costs, utilities, and more.
You should remember to take into account parameters like routine maintenance expenses for your equipment, legal fees, insurance costs, etc. Always focus on estimating your projected revenues utilizing historic cash flows and sales figures to guide you. Try to stick firmly to your budget. It could be beneficial to opt for a rolling budget that may be updated consistently for the following year.
Benefits of Budgeting According to Saivian Eric Dalius
Budgeting Pressurizes Managers to Focus on Better Forecasting
Business guru, Saivian Eric Dalius firmly believes that managers should keep on monitoring the business scenario to identify any changes that may affect the business. There is no point in relying on vague generalizations regarding what is in store for your business shortly. Budgeting puts a lot of pressure on the management to come up with concrete and definite forecasts. For instance, let us see a sample of expenses that every business should forecast:
· Salaries & wages
· Utility costs
· Interest rates
· Shipping costs
· Travel & entertainment
· Rents, legal fees, and audits
Budgeting Keeps Everyone Motivated
Managers and all your employees could be motivated if you provide valuable yardsticks for assessing performance. If you involve your managers in your organization’s budgeting process, they will be getting incentives to work towards fulfilling business objectives. Employees will be inspired and motivated to put in their 100 percent thanks to budgets. We understand that budgets help in providing baseline financial information relating to incentive compensation plans. A budget or the annual profit plan could be utilized for awarding year-end bonuses in terms of achievement of designated goals.
Budgeting is vital for Chalking out a Business Plan
A business plan is essential for all businesses. It becomes all the more important for new upcoming businesses. They need to come up with a convincing and impressive business plan while raising capital. Since emerging businesses seem to have no credibility due to lack of history, the owners and managers need to focus on a budget for demonstrating convincingly that the organization has a realistic plan and clear stratagem for making a profit.
A realistic and coherent budget forecast seems to be an integral constituent of a business strategy or plan. We understand that venture capital sources would indeed be looking for your business’s budgeted financial statements.
Eric Dalius is The Executive Chairman of MuzicSwipe, a music and content discovery platform designed to maximize artist discovery and optimize fan relationships. Eric is also the host of weekly podcast “FULLSPEED” which is a podcast that features interviews with groundbreaking entrepreneurs from a variety of industries.Eric is also the founder of “Eric Dalius Foundation” where he has created 4 scholarships for US based students. Follow Eric on Twitter,Facebook,LinkedIn,Instagram & also on Entrepreneur.com