process essay- creating a budget

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Process essay- creating a budget
Abstract
Financial planning in an organization requires a well-prepared budget. However, some of the budget preparation procedures do not create a budget which is compelling and operational. They also fail to provide financial analysis of industries. A reasonable budget is a significant tool when it comes to the management of your company. many business owners see the budget as a method of controlling expenditures, but it has a wide variety of uses. Some of these applications include measuring your company progress, establish the profitability of different departments and services, measure the impact of proposed hires or investments and point out the inefficiencies. The purpose of this article is to educate various company owners on how to prepare a budget. Most of them do not know how to make budgets which leads to the development of faulty budgets. the education is therefore essential because it will assist them to avoid flawed mistakes in budget creation.
Keywords: Budget, planning, balance sheet, benchmarks, industry

The budget creation is essential for any organization because it assists in some areas such as financial planning. To ensure it works out efficiently the firm manager should follow some processes as stated by Carlson, Bethany and Palaveev, (58). These procedures include; appointing a business manager, dividing the company into departments, developing a working budget, preparing a comprehensive budget for the firm, comparing the industrial budget with your best year and industrial benchmark finally, you should monitor the progress of your company against the budget.

The paper explains all the processes involved in budget creation.
The first process in budget creation is the appointment of a business manager. For a budget to be adequate, there should be a champion who has the ability to place the budget together and also supervise its implementation. If you are the only manager in your firm, you should allocate enough time for budget planning. The second step is to divide the company into departments. Division of different departments within the company helps in quick implementation of the budget. According to Carlson, Bethany and Palaveev, (58), a reasonable budget allocates measurable goals and responsibilities to various managers in the industry. Every worker should have his or her duties in the entity. The next step involves the development of an operational budget. Starting with the generation of revenue, come up with a realistic budget for every department in the organization (Carlson, Bethany and Palaveev (58). The budgeting of every department separately helps in simplifying the work.
Then we have the preparation of a comprehensive budget for the firm. Before the development of the functional budget, the operational budgets have to be approved. They are then combined into the overall budget of the industry. Prospective loss declaration, balance sheet and profit statements can later be established. In addition, the manager should compare the industry benchmarks with the budget and your best year. Carlson, Bethany and Palaveev (59) state that every company has its own unique characteristics. Comparison of information from different groups can, therefore, provide an essential reality check. The similarities may appear instructive just like the differences between entities. The last process of data creation is the monitoring of the progress of your business against the prepared budget. If the budget is permitted to gather dust when complete, it offers excellent assistance to the management of the company. The actual financial position of the year should then be compared with the budget.
Conclusion
These processes offer great assistance to the management of the organization. For example, the comparison of the budget against the company’s progress helps in fine-tuning the budgeting process and monitoring of the business for the coming years. If managers follow the process keenly, they will have a chance to develop an outstanding company with better qualities than that of competitors. The paper is therefore useful for managers who would like to create budgets for their organizations. It is because the processes are simplified in such a way that everyone can understand and implement effectively.
Works cited
Carlson, Bethany and Philip Palaveev. “Budget Brawn.” Journal of Financial Planning, vol. 17, no. 3, Mar. 2004, pp. 58-63. EBSCOhost, search.ebscohost.com/login.aspx? direct=true&db=bth&AN=12478296&site=ehost-live.