Chartered Accountant in Delhi India - Blog Section

April 052014

Why you should plan a budget for your company?

A budget helps you build out your long-term goals and work towards them. There are various reasons why a business should prepare a budget…..

1. You need to know how much cash you need to support the growth or lack of your business& company.

2. If you don’t aim for a sales or profit figure, it is highly likely, you or your team don’t have a clear idea of where the business is going.

3. You need to budget your costs so that someone in the business can keep them under control.

4. It is likely in the year of a growing business that you will have to recruit. Your budget should tell you the cost of this and also the cost of not recruiting quickly enough.

5. Comparing your budget to your actual performance will give you a better idea of your profit margins.

6. Doing a sales budget gives you an idea of how realistic your sales growth is. If a sales target has been produced by a salesperson – watch out, it will often be wildly positive. Sense checking this will you more of a reality checks.

7. Yes, your budget will not be 100% accurate. How can it be? However, it will be more accurate and you will be in a better position to predict your future if you spend the time planning your finances.

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