Budgeting is an important feature of every financial plan. Whether it is a household, a multi national, or a small enterprise, budgeting helps people in managing the day to day expenditure and saving funds for the future. In other words, budgeting is making predictions about the future and managing the finances in such a manner so that you do not have to face any discrepancy in the near future. Budgeting and forecasting is important as they help in establishing a set of rules for managing the limited finances and how they should be used.
Since a startup is more susceptible to the changes in the market, it becomes critical for a startup to have a proper budget. By budgeting, a startup can create a business model based on the available finances, assumptions about the future and establishing goals on the basis of such assumptions.
Budgeting is an important management tool as it allows the business to have a clear idea of how much finances that it requires, may require, why it requires and what are the sources from which it can acquire the finances. Budgeting helps in identifying the various risks and creating the required funds to avert those risks. Budgeting is critical to a business’s success and should not be taken lightly as your business’s foundation depends over it.