The key to ensuring financial success begins with good organization and the effective use of effective tools, such as various types of budgets that will help you make the management of your entrepreneurial project easier.
Budgets are an integral part of management planning and are conceived as methodical calculations, exposed, planned and formulated in advance of all financial concepts that represent income and expenses of companies, organizations, families and individuals in a given period.
By virtue of the range of financial concepts, there are various types of budgets aimed at organizing the necessary projections for each type of line corresponding to each type of item, whether income or expenses.
What is the importance of budget types?
In principle, let us remember that budgets are of vital importance for any organization, so much so, that these are the first tools that entrepreneurs forge before carrying out their projects, so we can affirm that they are the seed that must be cared for and managed. .
The financial position of a company, an enterprise or a family at a certain moment, can be of vital importance for their stability, since it is the starting point of many decisions that we will make to give continuity to the actions that we have been taking. or on the contrary, to modify their course.
Given that our decisions can affect various areas of our company or undertaking, it is necessary to have organized information on each and every one of the separate financial items that may be compromised, hence the importance of having various types of budgets .
By virtue of this, we must develop the ability to know how to combine the types of budgets that we have available, since the correct articulation of the different areas of our company or enterprise, and even our family, will depend on it.
The importance also lies in the functions that certain types of budgets fulfill. These can be precise and timely analysis functions, performance control, goal execution meter or resource utilization capacity, among many others.
The types of budgets
The budgets can be of a wide variety of types, and will depend mainly on the attention to the characteristics required by the company, the conditions in which the environment is presented or the user's own needs. In this sense, we can classify budgets by the type of variable that needs to be addressed.
Budgets according to the short-term and long-term scope
The first, which cover operations in periods of no more than one year, and the second, generally applied to corporations or large-scale companies or State development plans.
Budgets according to the legal nature of the companies
These can be public, applied to government companies and institutions, or private, intended for the operational area of capital companies owned by private individuals.
Budgets adapted to the operational function within the company
These can be of operations, which are generally estimated in projections for future economic cycles of ratio such as sales, production, costs, labor among others and financial, which are estimated for the calculation of elements that affect the company's balance sheets. .
Budgets according to your flexibility condition in fixed or rigid
intended for a single level of operation and that do not allow adjustments and variables or flexible that adjust to various activities and can be adjusted according to the conditions of the financial environment at a given time.
However, to ensure your economic growth and the success of your project or enterprise, we present you with some types of budgets that you should know and that, due to their ease in preparing them, will surely become powerful financial tools that will help you organize your finances. It will only be enough for you to choose the one that best suits you and get down to work.
Master Budget
The master budget is the main budget of a company. This collects the information of all the individual budgets of the organization and compacts them in such a way that, with a simple check, you will be able to have a precise idea of the financial position of the entity at a given moment.
In the same way, this budget, given the characteristic of housing all the information, fulfills the main function of reflecting the balance of assets and liabilities of the company, as well as the income variables such as production or sales and the expense variables such as consumption, purchases, depreciation, among others.
It is not necessarily for the exclusive use of large companies, since its functionality can even be applied to personal finances. What is certain is that it should be part of your business management tools for your business and a safe path for your economic growth.
Sales or revenue budget
This is one of the types of budgets that you must have on hand and manage very well. It is not only used to make estimates of the income or sales that the company will have, but also the information where those resources come from.
The importance of this budget lies in the fact that, if you know how to give it a good reading, it can give you an idea of the expected behavior of the demand.
By virtue of this, I suggest that when preparing this budget, you take into account elementary marketing aspects such as the segmentation of the target audience, the economic circumstances of the environment and even the weather conditions of each season. This will allow you to accurately estimate the sales or income that you will obtain.
production budget
Given the purpose for which companies are created, which is none other than to produce an item or provide a service, the production budget is the detailed record of the estimates made of these activities; therefore, it is mandatory for the vast majority of enterprises.
For the preparation and management of this budget, it is absolutely necessary to know the estimates reflected in the sales or income budget for the products manufactured or services provided by the company, since due to this we will be able to calculate the scope of the production activities. .
A particular characteristic of the production budget is that it presents to the interested party all the details of the cost of its production, such as the amount of inputs, raw materials, labor, among other aspects.
Cash flow budgets
The cash flow budget will be of great use to you for the continuous monitoring of the behavior of your enterprise, since it has the purpose of breaking down in the very short term, generally in periods of no more than one month, the constant flow of both the income as well as expenses.
This will allow you a constant evaluation of the financial position of the company and will determine if it has the necessary profitability to make it viable in economic terms and improve liquidity when necessary.
operational budget
This budget collects all the economic information from the different areas of the company, both forecasting income and expenses and its management, will depend on the estimation of the rest of the company's budgets.
For its preparation, elements external to the company or enterprise must be taken into consideration, such as economic indicators and future projections such as inflation rates, unemployment levels, exchange rates, among others.
marketing budget
Although it is little known, we suggest you prepare a marketing budget for your business. This budget is used in order to estimate the position of your company in the promotional field of the branch of your product.
Basically, it collects information on the amounts set aside for advertising and positioning services of your brand, either through digital media such as TV, Internet or social networks or through print media.
The start of your business must have tools that allow you to maintain clarity and order in your finances to ensure your economic growth. For this reason, we invite you to continue developing the Tools for decision-making and achieve the success of your business.