It is very important for a business to have financial goals as well as create a budget plan. That way, each entity in it is able to allocate its resources effectively and efficiently. In this article you will learn how to make the right budget plan as well as the things you need to know.
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What is a Cost Budget Plan?
A budget plan is an estimate of income and expenses made for a certain time period and used to control business operations.
The purpose of this planning is to mitigate risks so that the company’s financial performance is not worse than expected.
In the preparation process, budget planning includes three main steps, namely as follows:
- The planning stage aims to outline the direction of the business’s financial goals and build a model of expectations for the next 3 to 5 years.
- Budgeting stage (budgeting) focuses on documenting the overall plan which is then broken down month by month. This document is usually established at the beginning of the fiscal year and will be evaluated periodically so that the company can make adjustments as revenue increases or decreases.
- The forecasting stage uses historical data and considers current market conditions to estimate future financial results so that it can help the management team anticipate the results. These estimates may be adjusted as new information becomes available.
Benefits of Making a Budget Plan
There are at least 5 main benefits that companies can experience if they make a cost budget plan. Berikut uraiannya:
- Helping companies manage business finances so they are able to invest, manage operational needs well, or even expand their business.
- Helping all decision makers to make appropriate and strategic decisions based on real data and available information.
- Helping businesses allocate funds appropriately so that business processes continue to run well.
- Identify current problems, find solutions, and prevent them from recurring in the future.
- Develop future strategic plans to increase revenue and business growth.
How to Make a Cost Budget Plan
To create a budget plan, you can follow the steps below so that the resulting document contains valid and reliable information.
1. Schedule a Meeting
A cost budget plan cannot be made by just one person or one department. The reason is, the main aim of this planning is to realize a comprehensive business financial resolution. Therefore, related parties must be involved in this process so that they understand the budget and their respective responsibilities and comply with them.
2. Collect Past Financial Data
To make financial projections for the future, you certainly need financial data from the past. This historical data is useful as a guide in creating a realistic budget, in accordance with existing data and facts in the field. Only then will the company be able to improve its performance in the future.
3. Determine financial goals
Financial objectives provide clear direction in the budgeting process. The hope is that everyone involved in a business financial plan can mobilize their efforts to achieve the same goal. This process also formulates detailed strategies that will be carried out to realize these financial goals.
4. Make an Initial Budget
The first round cost budget plan was prepared based on feedback from the parties involved and historical financial data. Draft pertama anggaran harus mencakup semua informasi yang diperlukan sehingga kamu dapat meninjaunya dan melakukan penyesuaian kalau diperlukan.
5. Review the Initial Budget
After creating an initial budget, take time to review it. Check for inconsistencies, inaccurate financial records, incomplete data, or confusing or misleading information.
6. Revise the Budget
Based on the review process, make revisions to the budget as deemed necessary. It is important to revise the budget properly so that the cost budget plan created can be approved and valid for the needs of the organization.
7. Approve the Budget
Before approving it, everyone involved in the budget creation process must check the budget plan and give their approval. This is critical to ensuring each business entity has the same financial goals.
8. Make a Budget Report
The budget report must include all relevant and detailed information from what was agreed upon in the budget meeting. Furthermore, this will serve as a guide in making related decisions.
9. Monitor progress regularly
It is important to continue to monitor the company’s progress regularly and ensure that the budget is still being adhered to. Apart from that, the company can also immediately make adjustments if there are special findings that must be followed up immediately.
Example of a Cost Budget Plan
1. Example of the most basic budget plan
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2. Example of a budget plan for an event
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3. Example of a Cost Plan for Creating Content Marketing
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That’s all the information about how to make a budget plan complete with examples and all the information you need. As you have read, to create a reliable cost budget plan you need to look back at the company’s historical data.
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