6

Chapter 6: Budgeting the Finances

Tip:“When we have money, we start making mistakes” (Jack Ma. Founder and CEO Alibaba Group)

A budget is a plan that is expressed in quantitative plans. It is prepared prior to a defined period of time and it is pursued during that time for the purpose of attaining given objectives.
Do not create a budget just for the sake of having one, you should have objectives to why your business keeps running on a budget annually.

Objectives of Budgeting
1. Business Structure
A budget is especially useful for giving a company guidance regarding the direction in which it is supposed to be going.
Thus, it forms the basis for planning what to do next.
A CEO would be well advised to impose a budget on a company that does not have a good sense of direction.
Of course, a budget will not provide much structure if the CEO promptly files away the budget and does not review it again until the next year.