Budgeting Case Study

Budgeting

I know firsthand how important budgeting is, I own a business and being a small business owner, I have learned how to be efficient in my business. I also believe that budgeting is a must for any size business to succeed and become profitable. In fact, I am an income tax professional, and I have advised many of my clients in their business as well as, their personal finances when it comes to budgeting. Budgeting refers to the process of planning on expenditure and aids in determining the availability of capital to fund a project. In a human resource management context, it helps management forecast on the human resources required to accommodate the future goals of the firm (Dudin, 2015). Some of the steps are undertaken in the budgeting

They account for different variables which include product sales, expenses on labor and production expenses (Lanen,

It is significant in determining the optimal utilization of cash in the business (Lanen, 2016).

The strengths of budgeting are;

Resource allocation

Budgeting helps an organization to optimally utilize its resources by ensuring that they are employed in projects generating the highest returns. For instance, the cash budget ensures proper monitoring of cash by prioritizing on its outflow and inflow (Brooks, 2015). It forecast on future cash projection based on the present cash flows in the business.

Objective realization

Budgeting helps an organization to realize its operational potential. The managers set out the action plans meant to aid the organization meet its objectives and goals. Management forecasts on the finances required to implement the strategies (Brooks, 2015). Once the strategies are implemented, the organization will be able to achieve its goals which may be expanding operations.

Some of the consequences of lack of an effective budget are as stated below;

Mismanagement of