Overview

Have you ever prepared a budget? Have you ever planned to achieve a goal, worked out how much you can afford each week and what expenses you might have to pay to reach the goal? Planning a holiday is a lot like planning a budget. You decide on your destination (the goal), calculate your expenses (airfares, accommodation, new clothes, spending money) and establish a plan for how to earn the income required to achieve your holiday.

Using budgets in the business world is essentially the same. They are a common and important management tool, helping you achieve your organisational goals by setting targets to be achieved within specific timeframes, allowing you to evaluate your performance against those targets and make adjustments for the future.

However, like any tool, it is only as good as the person wielding it, or in this case, the person preparing it. Remember the old axiom ‘rubbish in, rubbish out’? If a budget is not carefully planned, researched and developed to meet your operation’s requirements, it is no longer a useful document, but a pretty piece of paper with lots of figures on it.

So let’s look at how we can develop a useful tool to help you run a successful business, and not a document that is only useful for looking good in the company’s annual reports.

In this unit you will learn how to:

• Prepare budget information
• Prepare budget
• Finalise budget
• Monitor and review budget.