Budgets can be a measurable determinant of success. At the end of each year, your department will either have a surplus or a deficit, which is a quick indication of success or failure. In an article for TechRepublic, Jack Wallen explores how to properly create a budget. There are 10 dos and don’ts when it comes to making a budget:
- Do plan for the worst.
- Don’t spend to spend.
- Don’t overestimate.
- Do budget for fluctuations.
- Don’t be overly complex or too simple.
- Don’t forget about taxes.
- Don’t get hung up on the differences.
- Do involve the important people.
- Do plan for late payments.
- Do look at a budget as a work in progress.
Show Me the Money
Unknown things are bound to happen, and it is vital that you are prepared. Set aside a portion of your budget to be your safety net in case disaster strikes. It is easy to get suckered into buying the latest and greatest simply because it is the hot new technology on the market. However, careless spending can dramatically eat away at a budget and is not a good allocation of money.
Everyone is hopeful that their yearly revenue will skyrocket past last year’s number, but never overestimate. It is better to underestimate your revenue so that you have room in your budget if your profits do not turn out to be as high as you expect them. Likewise, most industries suffer from fluctuations in the market depending upon the season. It is important to keep these peaks and valleys in mind and plan for some fluctuations.
Never make your budget too simple or complex. If there are too many finite details in the budget, it will become inflexible. However, a budget that is oversimplified is a problem as well. There is a balance to be had.
Taxes are something you can always rely on because they will always exist. Remember to incorporate your tax expenses whether they be quarterly or yearly. The chances of you perfectly balancing a budget are slim, and that is okay. There will always be differences in numbers, so do not fret. That being said, the budget may be yours, but it affects other important people. Bring in other departments and discuss the budget. Some of them may even have ideas on how to handle the budget better than you.
It is unfortunate, but there may be people who just do not pay you on time. These late payments should be anticipated and factored into any budget. Lastly, a budget should not be seen as a be-all-end-all document. A budget is continuous, and you should be flexible with it. Flexibility will help to keep you sane and keep your budget from drowning in over-spending. You can read the original article here: http://www.techrepublic.com/blog/10-things/10-budget-pitfalls-to-avoid/