The beginning of a new project, such as daring to establish your own business, represents new challenges, new knowledge and greater responsibilities. So it is important to take action and trust our potential to achieve it. As I mentioned in my previous blog titled Four Essentail Elements To Establish Your Own Business, the determination of the budget occupies the second place, after making the decision to create your own business, being a key element to start and later maintain the financial functionality of the business.
In general terms, a budget presents and estimates the amount of money that is required to cover start-up expenses and to subsequently maintain the operations of the business that you want to establish. It is a tool that allows us to maintain a vision and general control of finances, which helps us estimate income, calculate expenses and financial needs, which will guide us to achieve our goals, which are earnings and the expected success. Data that will undoubtedly help us to initially define if we have enough savings to give life to the project or we will need some type of financial help, such as loans to achieve it. In addition to facilitating the development and implementation of our business plan, to make the earnings presented in the budget a reality. Reason why it is vitally important for our business that the implemented work plan is fully aligned with the budget, so that it is viable and effective.
Therefore, initially it will be necessary to establish a budget in each of the areas, where the expenses of all operations are estimated, such as: the purchase of materials, programs and equipment. In addition to the estimate of the income from the sale of the products or services that our business represents and their promotional expenses. As perfectly defined in the Business Finance article by S. Nicholas Woodward, published at https://www.britannica.com, which states the following:
“A complete budget system encompasses all aspects of the firm’s operations over the planning period. It may even allow for changes in plans as required by factors outside the firm’s control. “
Without forgetting to include in the budget, the payment of general business obligations, such as the payment for the electricity service or for the concept of loan payments. In addition, it is very important to determine an amount of a cash budget, which will allow us to have an amount of money available to cover any operational or administrative need that may arise, which in turn will also help us to control excesses. cash or deficits, which is an important factor in maintaining the daily operations of any business.
It is worth remembering that the budget must be adaptable and flexible according to market trends, which will allow you to maintain your stability and competition. Therefore, it should be reviewed periodically, when evaluating it and depending on the result obtained from operations, such as income and expenses, more accurate decisions can be made to maintain, update and even define how to promote your products and services. Decisions could be made such as: cutting expenses or implementing new projects in order to obtain higher profits at the end of the year.
Without a doubt, the budget is an essential element when establishing your own business, it is not only a tool to know the amount of investment that the desired business requires, but also offers control and financial guidance to start and maintain general operations and administrative, with the objective of obtaining the profits and the projected success, allowing to calculate the profitability of the business, in addition to preventing and reducing risks. Which, in combination with the implementation of a good business plan with defined goals and objectives, that are directly aligned to the business budget, will greatly increase the chances of achieving projected profits and enjoying the success of your own business.
Please do not forget to visit our YouTube channel, where you can find promotional videos, which can give you ideas for the development of your business while being part of the growth of our channel.
Visit: https://www.youtube.com
Channel: Woman Presence
DISCLAIMER:
The information provided by Woman Presence on our website https://womanpresence.com, is for general informational purposes only. All information on the Site is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site.
The contents on this site are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals. The use or reliance of any information contained on this site is solely at your own risk.
References:
Sanchez Galán, J. ; Coll Morales,F. (2016) Presupuesto. [Budget]. www. economipedia.com https://economipedia.com/definiciones/presupuesto.html
Woodward, S.N. Article Business Finance. www.britannica.com. https://www.britannica.com/topic/business-finance
(2019) CONEXIONESAN. La gestión del presupuesto de caja: ¿en qué consiste? [Cash budget management: what does it consist of?] www.esan.edu.pe
Picture: https://www.pexels.com/photo/a-female-talking-on-a-phone-in-an-office-10041260