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Never make these three budget mistakes or your company could face financial disaster

by , 04 September 2014
Your company's financial budget is of vital importance. It helps you monitor your spending and ensures you don't go over your income.

But because of this, business owners often become obsessed with their perfect budgets. This leads to budgeting mistakes that could cause financial disaster.

This doesn't have to happen to your company. You can create a budget and ensure it works effectively without making any disastrous mistakes. Particularly these three...

 

Avoid these three budgeting mistakes to prevent financial disaster

 
The three mistakes you must ensure you avoid are:
 
1. Incremental budgeting
This is when you just take your budget from last year and increase your expense amounts by the percentage of inflation. This is a bad idea because inflation doesn't affect everything equally. Some of your expenses may not even change or they may increase by more than the normal inflation rate.
 
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2. Don't confuse control and planning
The current economic climate means it's impossible to completely control your company's finances. After all, you may make a huge profit one month and then make a loss the next because suddenly people can't afford to buy things. In the same way, your expenses may change.
 
You can use your budget to plan for these problems and create ways to deal with them, but you can't use it to control your finances.
 
3. 'Chiselled-in-stone' budgets
Because of the ever changing nature of your finances, you must be flexible in your budgeting. If you treat your budget as if it's set in stone you'll struggle to deal and adapt to changes in your financial situation.
 
 
These three mistakes could have a serious negative impact on your finances so avoid them at all costs. 


PS. Here is an amazingly simple way to manage your financials, with the Master Budget Series
 

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