What is the budget?

By budget we mean a maximum figure that the company makes available for achieving its objectives, without exceeding the limits set by the company and it is one of the most important operational tools because it allows to define a path to follow coordinating its activities.

With the term corporate budget, we refer to a document that concerns a company's expenditure forecasts over a limited operating period in order to achieve a specific result.

The budget consists of two important parts:

• The operating budget: which illustrates the income statement.
• The financial budget: which illustrates and details the financial flows resulting from the economic forecasts made, plus investments and cash.

It is structured on four levels:

• Investment plan: the starting point of the budget.
• Economic plan: revenues, costs.
• Asset plan: the set of investments, current assets (the set of short-term uses) permanent capital (mortgages or loans).
• Financial plan: the investments.

And it has a dual function:

• Planning: the budget defines corporate priorities and resource allocation.
• Control: having a predefined budget allows you to check the company's consumption data over the course of the year.

How is the budget planned?

The economic budget planning has a twelve-month period, divided into shorter periods (months or quarters).

We can plan the budget in various steps:

Step.1 Simplify your financial data: when there are many data points and descriptions, reading the numbers becomes impossible, so make an order that is simple and quick to understand.

Step.2 Base it on the past: drawing on past experiences, if you treasure your experiences, you will know how to reorganize resources more simply.

Step.3 Analyze general costs: to complete the budget it is necessary to look at general costs, divided into:

• Fixed Costs: these are costs that do not change much, unless the very structure of the company changes.
• Variable Costs: these are costs that vary from one year to the next.

Step.4 Allocate resources and involve your team members: knowing how much needs to be spent for a company is very important in order to balance one's business plans, so giving clear information to your collaborators helps to work better.

Step.5 Divide the budget into sections and check periodically: conducting a monthly or quarterly review to ensure that you're not exceeding the set budget threshold.

Step.6 Prepare the budget towards the end of the year.

Step.7 Account for seasonality: if you have peaks in revenue or costs during the year, take them into account.

Step.8 Write a document for your budget.

Case Studies:

Earning 1,800 euros with Facebook on a budget of 5 euros per day.

Objectives: sales and new customer acquisition.

Industry: school apparel.

This case study demonstrates how to earn with a daily budget of 5 euros:

Using Facebook, which has lower costs, by posting targeted ads at mothers and children in the news feed. Here are the results after about 45 days:

budget spent 234.77 euros;

1,805.54 euros billed directly through the campaign.

An important consideration: all these orders were made by new customers, so people who had never purchased from this store before.

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