The Budget is a powerful tool when it comes to planning and managing a business, because it allows the entrepreneur to know their revenues, costs and expenses thoroughly, as well as providing a long-term vision that will be very useful in scenario formulation.
The first great advantage a good budget brings to the Company is that it can measure whether its projections are being met, and if not, actions that can be taken in time for the planned outcome to be met.
Carrying out this monitoring work between the budgeted and monthly accounts, we will create a historical basis that will be of great value in understanding the behavior of the company’s revenue and expenditure structure, facilitating the preparation of future budgets.
With a defined budget, each area of the company can follow its goals, taking the centralization of this activity from the hands of the entrepreneur, who can focus on more strategic activities of the company. The sales team will know in advance whether the Revenue from the Sold Products will or will not reach the goal and with that they can actively act to achieve the budgeted result. Likewise, if the values for purchases of office supplies are high, the administrative department can begin to reevaluate purchases and look for cheaper alternatives to supply.
Much more than designing a cash flow, the budget makes the entrepreneur think about how much money will be allocated in each part of the business and this includes how much will be earmarked for business growth. A structured growth allows tranquility in the search for competitive advantage.