Budget is a quantitative statement which shows expected income and expenses for a given period of time. So creating budget for an entrepreneur is essential as it will provide guidelines for expected income and expenses for a financial period(like a month, a year) and help him to plan ahead. Budget can help to compare expected and actual numbers and determine changes so that proper action is taken on time. Budget not only helps an entrepreneur to plan ahead in terms of finances but also enable to keep a track on various sources of income and their allocation in different business activities and provide clarity to make well informed decisions. Since budgeting is necessary to manage business finance here are some tips an entrepreneur must consider regarding budgeting.
- Make a flexible budget so that it can be amended according to changing needs.
- Setting aside money for taxes - as planing ahead for taxes is important for an entrepreneur.
- Opening sperate bank account for business - an entrepreneur to carry his business transactions smoothly should open a current account and keep his personal finance separate from business finance as it will help manage business finance smoothly.
- Setting financial goals is an effective in managing finances as it provides clarity and direction to go ahead.
- Need for understanding risks for entrepreneurs is significant to define plan and prepare budget to manage company 's finances.