Budgets are plans. They are spending plans, activity plans, sales plans, marketing plans, all linked to the disciplines of careful projection and resource allocation.
Simple Math, Simple Numbers
The expense budget is built on common sense and reasonable guesses, without statistical analysis, mathematical techniques, or any past data. The mathematics are simple; sums of the rows and columns.
In the example below, each line of expense occupies a row, and months and years occupy columns. The Total expense row sums the individual monthly expense columns. The annual expense column sums the months for each row, including the Total row.
Simple Expense Budget
As you develop a budget, think of it as the part of your plan you can most easily control. Consider your plan objectives, your sales and marketing activities, and how you'll relate your spending to your strategy. Remember as you budget that you want to prioritize your spending to match your priorities in sales and target marketing. The emphasis in your strategy should show up in your actual detailed programs. That's your budget.
An expense budget can be as simple or complex as you wish. Greater detail in your plan will give you more information about, and more control over, how you spend your money.
Copyright © Timothy J. Berry, 2006. All rights reserved.