ABSTRACT
Creating, monitoring and managing a budget is very important. It helps in the process of allocating resources where they are needed. We need to work out what we are likely to earn and spend in the budget period. Our business may have different types of expenses, and we may need to divide the budget by department. Our business plan should help in establishing projected income, cost of activity, fixed costs and overheads, so it would be worthwhile preparing this first. We can look at our costs and work out ways to reduce them, as well as seeing if we are likely to have cashflow problems, and giving yourself time to do something about them. It is useful to work out the relationship between variable costs and activity and then use our activity forecast to project variable costs.
