Drawing up a budget - checklist

Drawing up a budget - checklistA helpful checklist on drawing up your business budget, including what to put in it and who to involve in the process.

  • Involve employees who will be responsible for the budget or who have information which will help you prepare forecasts.
  • Collect historical information on sales and costs.
  • Consider what your sales plans are, how sales resources will be used, and any changes in the competitive environment.
  • Prepare your sales forecast, taking into account any seasonal variations in activity.
  • Use historical information, and any changes in operations or prices, to budget for overheads and other fixed costs.
  • Establish the relationship between variable costs and sales, and use your sales forecast to project variable costs.
  • Identify any non-operational cash flow, such as taxes and changes in financing.
  • Use your experience of payment patterns to forecast the timing of all income and expenditure items.
  • Bring together the figures, using spreadsheets or financial software, in a cash flow budget.
  • Prepare any other budgets you will find useful, such as those for profit and loss and the balance sheet.
  • Ensure your budgets contain enough information to let you monitor the key performance indicators you use to manage the business.
  • Identify any significant areas of uncertainty, and if necessary prepare separate budgets for different scenarios.
  • Agree the budget with the individuals who will be responsible, and be prepared to amend it if your assumptions are unrealistic.
  • Regularly update budgets as actual figures become available and circumstances change.

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