How to Make a Business Budget Plan
How to Make a Business Budget Plan
A budget is a business plan component that helps to ensure success. Typically, the budget covers a 12-month period. Once it is established, management compares it with actual expenditures to determine if the company is operating within its means. If revenue fails to meet expectations or expenses exceed the budget, management must adjust business activity accordingly. For example, a business might cancel planned projects to prevent a financial crisis. However, management might decide to initiate additional business activities if revenue and expenditures are performing better than expected.
1. Conduct an initial budget meeting with managers to discuss the planning process, which includes deadlines. For example, managers establish business strategies and priorities during the process.
2. Distribute a budget template to managers. This provides a standard format for the consolidation of budget amounts. For example, you might provide a spreadsheet that contains columns with monthly headings and cells formatted for dollar amounts.
3. Review past and projected revenue and expenses. For example, managers evaluate their past and planned projects to determine budget proposals. They enter their proposals into respective templates.
4. Consolidate budget proposals into a spreadsheet. This creates a list of proposed business activities, which are known as budget items, and their estimated costs.
5. Meet with managers to review the consolidated budget. Typically, the budget total exceeds a company’s realistic amount for future expenditures. Therefore, managers must defend their proposed activities.
6. Adjust budget items to establish a realistic budget amount. For example, managers might trim or eliminate activities.
7. Obtain budget approval from senior management. If the budget is not approved, meet with managers to revise it.