What is the significance of budget management?
1. Preparation will lead to failure. Failure to do so will lead to failure
Whether it is an individual or an organization, financial planning is Beneficial and harmless. Many entrepreneurs think that they are prepared to burn money when starting a business. However, start-up companies also have different levels of budget management needs.
2. Management and control tool for business objectives
Budget management is an important management and control tool for the company to achieve its business objectives, ensuring that business activities are carried out according to the predetermined route.
3. Means of reasonable allocation of resources
By preparing budgets, the company's resources, especially funds, can be reasonably allocated and limited resources can be used wisely.
4. Have better expectations for the future
Compared with not doing budget management, budget management can greatly enhance the company's expectations for future operating activities and be able to achieve "in the heart" Countless."
5. Enhance the ability to respond to business risks
Start-up companies have very high business risks and many uncertainties. Budgets can help companies cope with various uncertainties, especially Uncertainty regarding funding.
What are the main contents of budget management?
1. Expense budget
Expense budget is a budget that can be made by all types of start-up companies. The main content is the company’s daily Various expenses incurred in operation and management include employee salaries, welfare fees, office fees, rent fees, business development fees, brand promotion fees, technical service fees and other expenses.
2. Human resources budget
This budget is led by the human resources management function and mainly makes plans for the increase or decrease of various positions in the company, expected position salary, etc.
3. Income budget
Income budget is suitable for companies whose business model has been basically determined and can generate sustained operating income. It mainly makes reasonable forecasts of various operating incomes.
4. Cash budget
The cash budget is prepared by the financial function. Its main content is the surplus and deficit forecast of the company's future cash flow, which is used to reasonably control cash flow and make decisions on the company's financing timing. Exceed expectations.
Preparation and execution of three budgets
1. Budget period
The budget period of a startup company should be quarterly or semi-annual. Long, probably doesn't make much sense.
2. Preparation method
Since the business activities of startup companies are highly uncertain, and the business model, organizational structure, etc. are constantly changing, flexible budgets and zero-based budgets should be used and rolling budget approach.
3. Supervision and execution
Preparing a budget is the beginning, not the end! The focus of the budget is on execution, and the financial function should supervise the execution process of each budget.
4. Out-of-budget payment issues
Start-up companies’ business always changes rapidly, and there are many things to be done that are not within the budget. A simple and efficient approval process should be established to handle out-of-budget payments. Payment business.
Four Difficulties and Pain Points in Budget Management
1. Unclear business goals
Because in the early stages of starting a business, the founders and partners have no clear expectations for the company’s future development goals. It's not that clear yet, and may continue to be adjusted as the business environment changes.
2. Unclear business model
Due to the rapid changes in the competitive environment, the continuous advancement of Internet technologies such as mobile payment, and changes in user consumption preferences, startups are constantly exploring business models. , constantly seeking business models with competitive advantages.
3. High employee mobility
Startup companies generally have not yet formed their own human resources management plans, and the CEO’s lack of experience in personnel management results in low employee stability, which directly Makes budget management difficult.
4. Lack of financial management professionals
The personnel of startup companies are mainly concentrated in operations management, technical support, market expansion, customer service, etc. Financial management is generally very weak and there is no It is equipped with professional financial personnel and lacks budget management personnel.
5. Difficulty in budget execution
Company employees, including founders, partners, etc., have a superficial understanding of budgets. They often think that their companies are still far away from the budget and think that they have not yet reached the budget. It is so important that it directly leads to difficulties in budget implementation, and even becomes a mere formality.