One way of measuring success is of course by looking at financial outcomes – but how can you determine if the outcomes are successful, unless you have a yardstick against which to measure?
In accounting, we use budgets as a tool to measure the financial performance of a business – but even within the concept of finance, there are different types of budgets which can be used by businesses.
For small business, the most common types of budgets I use are:
- profitability budgets
- cash flow budgets
- start up/establishment budgets
Over the next while, I’ll be taking a look at these budgets and some of the information you’ll need in order to prepare your own – or to have handy when you call me!!
The important thing to remember with budgets, is that they are a guide only – but they are invaluable in assisting with decision making in both the financial and operating areas of your business.
If you have a budget for your business, now is a great time to get it out of the filing cabinet and review it – and if you don’t have a budget for your business, stay tuned…
PS Household budgets are equally important, I’ll be discussing those a little later