A budget could be all you need to make your business work, if you budget adequately, you might end up being on the pathway to success in your business A budget can be defined as a business plan that is for short term, it is widely expressed in financial terms. if you budget for your projects, you will understand and be in control of your business.
budgets are made so as to ascertain the predicted spending of the organization, it is quite important that managers make the best use of budget and ascertain its usefulness, these are some ways in which budget can help you as a manager
Co-ordination of various sectors of the business: a budget can help you as a manager to co-ordinate the different activities of your business, it also helps to complement activities together, for example, a manager might know the adequate amount of materials that will be needed for production, however, if the supply is known, budget can ascertain the amount of raw materials needed due to the facts of the demand managers must have got from the accounting department.
Promotion of forward thinking and knowing short-term problems: budget can help managers to think ahead of activities, they identify short term problems, for example, budget can enable a manager to know if there is going to be a production shortfall or if there is going to be reduced production due to a reason or the other, they are equipped with forward thinking and possibly solve those problems now.
Motivation: a budget can motivate managers towards success, this is because the activities to take place has already been stated out, it is more of a challenge for the managers to meet with these stated out activities, it helps them to also understand and put into consideration, the organisational task and objective(s).
Provision of basis for control: Budgets can push managers to ensure that activities align with the plans and short term objective of the company,it ensures that the managers are in absolute control, this is in major concern to information, information is important before the managers can be in control of activities, by forming basis of control, time is less expended. this is because the managers need little supervision for their activities, that implies that time is expended more for activities that will drive the company forward instead of time wasting for supervision.
Provision of authority for managers: in budgeting, managers are sometimes given the authority to spend by allocating funds for their activities, this gives the managers a feel of independence and as such, gives them the confidence to under go their respective project, it also ensures that the managers are responsible for their departments, it also ensures that the activities of the managers can be adequately monitored by the top management.
you should also consider the approaches to budgeting as this will ensure that you have the best of budget, these approaches are:
Discretionary budget: this approach to budget aims to see budget as the view of the senior management, it implies that the senior management uses its discretion to allocate budget. these kind of budget happens in the government, it can be used in commercial businesses also, it is used for activities where there is no clear cut activity between the resources applied and the benefits.
Zero base budgeting: this type of budget proposes that all spending needs to be accounted for, it implies that every time the need for an activity comes up, top managers will need to be convinced that they should spend, the amount for the budget is not automatically calculated, it is called zero budget because it has not been accounted for, budget is only done when the need arises. this kind of budgeted is used when the management of an organisation is unsure of the ac
tivity (an example is seminar/workshop or training), it is quickly arranged and treated as zero budget, negotiations on amount always follows this kind of budget plan.
a manager should know how to manage his/her business, Budgeting is quite important for your organisational success, it boost the confidence of your workers, and it also allows you to know who has not maximized his/her skills, thereby ensuring quality in the processes of your activities. have a success story today, Budget!!!