![]() 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. Reduce inventories by 2% by the end of the fiscal year.Decrease administrative costs as a percentage of revenue by 3 points.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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