Business budgeting involves outlining an organization's financial and operational goals for a year or longer. While Budget planning can occur at any time, for many businesses, business budgeting is usually an annual task. Before creating a budget the previous year's financial statements are often reviewed and budget projections are made for the next year. The basic process of business budgeting involves creating a list of a business’ fixed and variable costs and projected revenues.
Businesses often use special types of budgets to assess specific areas of operation. A cash flow budget, for instance, forecasts your business's inflows and outflows of cash over a certain period of time. This is used to measure an entity’s ability to know how long this resource will last.
One important aspect to consider when initiating the business budgeting process is that the initial budget must be flexible. The most well laid plans always have the potential to fail and the financial reality of a business is always changing. Your budget should mirror your financial reality and not remain stagnant. Business budgeting software is one tool businesses use to help in the budgeting process.