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Budgeting

Budgeting is the process of predicting and controlling the spending of money within a business. A budget is a plan to control finances, enable confident financial decisions and meet objectives and ensures there is enough money for future projects. It outlines what money will be spent on and how that spending will be financed.

As well as a budget for the overall business, it may be necessary to create budgets for particular sections of the business, what is important however is that these budgets are adhered to and that they are regularly reviewed and revised. Using up to date budgets enables flexibility and good cashflow management, review them against the actuals, look at how the fixed costs differ and are the variable costs inline with what was budgeted. Try and analyse the reasons for the changes between costs and turnover as well as the differences in timing.

The three main questions that are considered when putting a budget together are:

  • what are the projected sales be realistic, over estimates can cause problems in the future

  • what are the direct costs cost of sales, such things as materials and components to make the product or service

  • what are the fixed costs or overheads breaking these down into the components like staff, printing, advertising, utilities, travel etc.

Once you have this data you can work out how much money you expect to make, you can see if you are likely to have cashflow problems, you can look at ways in reducing costs, by buying wisely or by finding other ways to keep costs down  particularly when out and about see Cutting the Cost of Getting Your Photographs, and you can use this information to measure performance.

I have put together a Budget Control Checklist which you will find not only useful for making sure you get all the key points for the Budget section of your Business Plan, but it will also prove useful for other budgeting tasks throughout your business life.


See Also:

The Business Plan.

Marketing Plan

Photography Business Topic Section

 

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