Let’s suppose you think sales will rise by 10% in the coming year if you add two more people to your unit. Look hard at the assumptions you’re making. At its simplest, a budget creates projections by adding assumptions to current data. Is the budget just for this year, or is it for the next five years? Most budgets apply only to the upcoming year and are reviewed every month or every quarter. Other issues to consider when you’re preparing a budget: Your job now is to look at big-picture items such as computer systems and to determine how all the smaller-scale budgets fit together. You can assume that the head of the 12-person office has thought about printer cartridges and gasoline for the sales reps’ cars. As you move up in the organization, the scope of your budget will broaden.
But you should include detailed estimates for travel costs, telephones and utilities, and office supplies. If you’re creating a budget for a 12-person sales office, you typically won’t have to worry about capital expenditures such as major upgrades to the building. The smaller the unit you’re focusing on, the more detail you need. (Remember that a budget is just a plan with numbers.) How can you generate more revenue? Will you need more sales representatives? Where can you cut costs or reduce inventories? Make sure those goals line up with the organization’s strategic priorities.
PERSONAL BUDGET LINE ITEMS HOW TO
Here’s how to begin.įirst, list three to five goals that you hope to achieve during the period for which you are budgeting. Don’t map out a budget that you can’t meet-but don’t underestimate the possibilities. So what are the crucial strategies when preparing a budget? How can you use past financial data to inform your assumptions? And how can you ensure your budget will help you meet your strategic goals? This advice, adapted from the book Finance Basics, will help you better understand how to create a useful budget.īudgets should be ambitious but realistic. You know it’s important to weigh the costs and benefits before committing resources.
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