ABSTRACT
Before a final decision can be made about the establishment of any commercial venture and most not-for-profit ventures it is essential that budgets are prepared showing the predicted income and expenditure for the enterprise once it has been established. Every business takes time to settle down, to build up its markets, to regulate its expenditure, to judge its staffing levels, to tighten management control and to gain the willing co-operation of all those involved. Until this process has been completed the business will not be on an even keel. In the meantime, only the practice of actually running the business will show what, if any, modifications should be made. Before reality can have its full influence, the preparation of an initial budget must be to some extent a matter of guesswork. Advice will be sought from comparable ventures, but only as the business runs will it be possible to prepare budgets which are reliable indicators of future performance: even then predictions may turn out to be wrong. Because of inherent uncertainties initial budgets should not be too optimistic and must indicate clearly how they have been put together and the assumptions upon which they have been based.
