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Follow these three steps to create a foolproof financial budget

by , 26 August 2014
Budgeting is a very important part of your company's finances. It's the best way to ensure you manage your spending and can always cover the expenses you need to.

If you get the budgeting part wrong, it could spell disaster for your company's financial management. But how can you ensure your financial budget is tight and covers all the right points?

Read on to discover the three steps that can help...

 

These are the three steps you must follow to create a financial budget

 
Step # 1: Start your financial budget based on assumptions
These assumptions start with your strategic goals and plans. What this means is you must have a rough idea of your business expenses that don't have to be anything more than guesses or assumptions at this point. 
 
For example you could estimate your expense will include:
 
- Advertising;
- Debt;
- Computer expenses;
- Depreciation; or
- Water and electricity.
 
TIP: Your assumptions can be factors under your control, such as salary increases for next year will be 7%, or out of your control and dependant on external factors like raising inflation.
 
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Step #2: Ask what else you can do to achieve your objectives 
Coordinate the financial budget with your strategic goals and other considerations. For example, ask what else you can do to achieve the objectives.  
 
For example, do you have the goal of improving company performance and productivity? To do this, you must give staff new computers. You must reconcile this expenses in your budget.
 
Step #3: Control your financial budget
To make your financial budget useful, break it into manageable pieces. You must make your budget detailed about it so that your managers can see exactly what money they have to cover certain expenses.
 
There you have it. It's easy to create a financial budget which is foolproof and effective just by following these three steps.
 

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