Contribution of Budgets to Planning, Control and Motivation

Contribution of Budgets to preparation, Control and MotivationExplain how budgets contribute to cooking, control and motivation in an disposal Budgeting is a way in which call(a)inges plan for the hereafter. They show how policies are to be carried out during that era period in order to image the job objectives. Budgets not only help the worry plan for the future they too motivate their employees and help manage the business. Jae K Shim and Joel G Sigel define budgeting as a financial plan to control future operations and results. It is expressed in numbers, such as pounds, hours and so on. Budgeting when used effectively is a technique resulting in systematic production wariness. Budgeting facilitates control, communication and also provides motivation to employees. Budgeting helps businesses decide where it wants to be at a future date and what policies they feel they should introduce to make surely they meet their objectives. seening also helps the business anticipate anyPlanning is another purpose of budgeting, and is arguably its primary purpose. Budgeting allows a business to take breed of revenue and expenses from the previous period, and judge where the business will be in future periods. It also allows the placement to add and remove products and services from its plan for the future period. In larger organizations, the budgeting process whitethorn be completed by individual business units and compiled to form a master budget for the organization. This allows top management to get a picture of the entire business so they are able to breach plan accordinglyPlanning is highly infixed for the roaring functioning of any organization, big or small. And there are some different potpourris of planning involvedPlanning, in simple terms, involves drawing up a scheduled list of activities required to secure a particular destruction. In a company or even at home, a certain criterion of planning helps you finish tasks successfully. But in an organization with a gigantic workforce and many hierarchical levels, planning is quintessential to meeting the organizations objectives and targets.Types of Planning in an OrganizationStrategic PlanningOperational Planning financial PlanningMarketing PlanningProactive PlanningStrategic PlanningStrategic planning is the kind of planning that provides direction for the organization on how to proceed in the farseeing run. The organization makes clear the strategy it intends on pursuing to achieve all of its targets, and allocates resources and takes action accordingly. In order to be able to devise the organizations strategy, it is necessary that the organization knows where it stands in terms of its capital availability, its strengths and its weaknesses. Before formulate a strategy, the organization also needs to be aware of the economic conditions, and other environmental factors, which can pose a threat, or provide opportunity for growth. The team at the head of the organization most often does strategic planning. After considering all factors, they devise the strategy that would best help the company meet its goalsOperational PlanningWhile strategic planning looks at the organizations growth in the long run, operational planning is more than about tactical and short-term planning. This planning is essential to ensure that the organization is consistent in terms of its production and distribution of goods and services to the market. As operational planning is for short-term periods, it further helps in devising budgets for the organization. It provides a plan for the allocation of resources and at the same time, it sheds light on the policy decisions of the organization.Financial PlanningMoney matters. For the continued sustenance of anything, from a category to an organization, money is important. But things dont end with just having enough money. Budgeting appropriately and planning on how to use the finance available are signs of a good organization. Financial planning in an organization deals with the preparation of a budget. A budget is a list of all the planned expenditures and revenues of an organization. In certain organizations, the budget is also sometimes referred to as the financial plan, which comprises of the balance sheet, the income statement and the cash flow statement. Financial planning implies estimating the expenses the organization will incur, and the revenues it hopes to earn.Marketing PlanningMarketing is the way, by which companies promote themselves, their company, products and services, to gain the attention of the large number. Marketing is done to make the organization visible in the eyes of the common man so as to clear interest in their business. Market planning is needed to achieve all the marketing targets and objectives. Marketing can be done for any aspect of the organization their products, range of services, or even a brand they are launching. Most often, organizations have a separate marketi ng department, which is exclusively in-charge of carrying out marketing activities on behalf of the company.Proactive PlanningSome organizations plan proactively. Proactive planning means to plan, in advance, for something that has not happened yet. By planning ahead of any event, the organization has more leverage and is armed better to deal with the situation whenever, and if, it arises. The event can be anything, from floods and earthquakes, to riots or strike by employees. Proactive planning follows the motto of, Its better to be safe than sorry.There are a number of other planning processes too that are used by organizations. Some of the others include long term planning, short term planning, reactive planning, formal and informal planning. However, the above-mentioned ones are most commonly followed by organizations. No matter what it is named, any kind of planning is absolutely essential for the growth and success of any organization.Tips How to Prepare an Effective BudgetAn understanding of introductory requirements is necessary to prepare for an effective budget, whether its person-to-person or business budgeting. These requirements involve the need to quantify income and to track expenses regularly.Financial planning tools are available to facilitate tracking and planning. separates avail of a budgeting tool, financial planning software or the more traditional way of hiring a financial adviser or counselor. some(prenominal) financial tool is used, basic factors to achieve an effective budget remain the same. They include the hobbyOutline Patterns of Income and ExpensesTo be able to outline the pattern of preparing a budget, there are two basic elements in any simple or complex budget planning income and expenses. Whatever the basic necessities of an individual, a family or a business entity, income and expenses affect the fig and preparation of budgeting.IncomeA person who has a full-time job is certainly different from a self-employed business owner. It whitethorn be more than a struggle for the self-employed to wait for that contractual check to come in rather than an employee who is sure to receive a weekly, fortnightly or a periodic pay.They are all income but have different effect on budgeting. The total income is identified and written down.ExpensesThere are three basic types of expenses monthly, every quarter and yearly. They are identified and written down. Other relevant records should be delved into and located, from desk drawers, account statements, and other receipts lying around.Identify and Define Financial GoalsFinancial goals may be short-term and/or long-term, often larger expenditures. Personal or family financial goals are identified. For the singles, they dont have to worry about family finances. There are many kinds of goals in life. For this purpose the focus is financial goals. Examples of these are paying off a mortgage in 10 years, paying off a huge amount of credit card or big personal loan, sta rting a business, or a dream plan of holiday to favorite places. For those with families, goals may include college education for children. Whatever they are, financial goals include planned purchases and expenditures.Short- term goals often variegate from six months to one year, while long-term goals are plans from cardinal to ten years, perhaps even 20 years.Establish a Financial StrategyAn approach or strategy for a successful goal circumstance is one that is realistic and active and not in the back burner. Financial goals need to be reviewed sporadically, for changes, if necessary. If family is involved, the goals can be posted for the family to keep an eye on. Whatever strategy is used, a review of the goal should be done on a regular basis, monthly or fortnightly, to gear up proper manipulation of finances.Change a Strategy that Doesnt WorkBy all means, a financial goal that is deemed unworkable after some time, or due to a change in circumstance can either by abandoned o r modified. A lot of effort and thought are spent in setting up financial goals to effectively work and therefore should not be taken lightlyGiven the increasing levels of competition and ever ever-changing occurrences in the marketplace, any business corporate or entrepreneurial cant afford simply to work hard and make it a success. A business plan is a basic necessity in project management.Some business owners who agree that business planning is important also protest the neediness of time to plan in view of overburdening tasks. Another excuse given for not planning is that it limits options. Some business owners feel that a plan locks them into a set pattern of activities constricting their freedom to respond to opportunities. A good plan maps the best course of action to achieve predetermined objectives.Business PlanA business plan shows the purpose of the business and what it intends to accomplish. The more defined it is, the better equipped a business will be able to meet th e opportunities and risks that lie ahead. Business plans essential be used in the following instancesStarting up the businessMaking management decisionsDeveloping new productsExpanding the businessObtaining financingMaintaining and keeping controlAllowing other significant milestones in the businessBusiness Plan OutlineAlthough every business plan may vary depending on the business, certain components or sections are common to all business plans. Whats important is that it should be organized to provide essential information in a concise and logical format.Title PageTable of ContentsExecutive SummaryBusiness or Industry DescriptionProduct or run DescriptionOrganization DataFinancial InformationMarketing StrategyCompetitive AnalysisOperations PlanSuccessful Business Planning GuidelinesThe following guidelines are provided to assist entrepreneurs in the planning process and to make them become more proficient in using business plans to their advantage.Set aside time for planning All ocate time to do it. For your business to succeed, you must spend sufficient time on planning.Determine the needs to be accomplished what merely needs to be done? By identifying specific goal, attention can be focused on the key issues that have to be addressed retard availability and access to necessary data to plan effectively, information should be relevant, accurate and timely.Coordinate planning efforts with that of others make sure that people involved in the planning process are aware of what everyone else is doing. This is the only way to ensure that the various goals set for the business are consistent.Review the business plan periodically this is to ensure that the business objectives are clearly aligned to the business goals or objectives.Update the business plan Business experts normally recommend updating a business plan every six months. It is important to re-visit the business plan periodically to ensure it continuously meets the business needs.Make the business plan accessible. It must be ensured that the business plan is accessible to the employees who need it, for them to fully contribute their skills and expertise.Use the business plan this is the most important of all. The business plan, as the excogitation for business to succeed, must be put to full use.If unforeseen opportunities arise, the business plan can be changed to fit the circumstanceCommunication and MotivationOther goals that an organization may use its budget to achieve that are less obvious include communication and motivation. Budgets allow management to communicate goals and to promote goal congruence so resources can be coordinated and focused in key areas. Budgets also allow a company to motivate its employees by involving them in the budget. While top-down budgeting does not accomplish this goal very effectively, participative budgeting can be motivating. When an employee is involved in creating his or her departments budget, that person will be more likely to strive t o achieve that budget.Although business budgeting is a procedure that most businesses go through, it can be a greater tool than many people (and businesses) realize. The budgeting process can allow companies to communicate and achieve their goals, and allow them to monitor those achievements as well. It is also an important step in overall business strategic planning