Thomas Paine, the great revolutionary writer, is supposed to have said ‘People don’t plan to fail, they fail to plan’. His words of wisdom can certainly be applied to budgeting. Planning (together with foresight) is acknowledged as the best way to avoid financial problems. A well-planned budget helps you to collect and use information about the day-to-day functions of your business and to spot problems before they derail your business plan. Here are the steps to follow in developing your next budget... 1. See budgeting as a vital management tool. Your budget process consists of three main parts - forecasting revenue and expenditure, recording actual revenue and expenditure, and reporting and acting on variance between the two. Budgets usually evolve from business plans and, therefore, will change over time. Your first budget may be nothing more than a statement of targets. In subsequent years, with established benchmarks and an improving [...]