Budgets & Business Planning
This section is not aimed at the large Operator as they have their own dedicated accounts department specifically geared to the setting and control of their companies budgets and business planning. However, approximately 70% of all transport operators in the UK operate less than 10 vehicles and although they don't require the same facilities as the larger operators, they still require control of their business finance.
Whether an owner operator, or a small fleet operator, although you may not see the need for a budget, it is in your best interests to have
control of your finances, especially if planning for your businesses future. Budgeting is the most effective way to achieve this and
control your cashflow, as it allows you to invest in new opportunities as they materialise.
It is also the case that as your business begins to grow, you may find the need to set up seperate areas to cater for this, such as a sales or marketing department. If your business growth dictates these measures, you'll find the need to split your budget between these seperate departments, although each will be inextricably linked to the other financially.
What follows within this section is a very basic overview of budgets and the reasons for them.
What is a Budget?
A budget is a financial representation of an organisation's mission and strategic goals - essentially it is a plan translated into money and a tool for allocating resources and implementing strategic plans. A budget - be it an organisation-wide budget or specific project budget - must be carefully planned. To be effective it must also be implemented and controlled. One other fundemental aspect of a budget is that it can identify financial problems that could arise in the coming year.
In essence, a budget is about managing resources and getting the most from the resources you have available. It involves implementing resource management procedures and controls and includes managing costs and maximising opportunities. A budget can therefore:
- give you control of your finances
- gives a picture that enables you to continue to fund your current commitments
- enables you to make confident financial decisions and meet your objectives
- confirms whether or not you have sufficient funds to meet future projects
Overall, a budget outlines what you will spend your money on and how that spending will be financed. It will therefore provide a picture
of the future - defined by your plan - thus enabling you to achieve your pre-determined business goals.
A budget also provides indicators for evaluating employee performance and gives the staff goals to reach and steps to achieve them.
Budgets, Business Planning and Benefits
As a already outlined, a good budget comes from sound planning, which in turn will allow you to create a focus for the direction of your business and provide targets that will help your business grow. From this will come the opportunity to review your business performance and help identify any factors affecting your business. Sound business planning can give you:
- the opportunity to make improvements and identify potential problems
- will provide sound financial information, thus enabling you to make positive decisions
- will provide a clearer picture in which to make solid decisions to achieve your goals
- will undoubtedly bolster confidence in your decision-making
There can be no better reason for producing a budget than the fact that this puts you in control. The benefits that come from this include (and ensure) that you're better placed to:
- manage your finances more effectively
- allocate appropriate funds and resources to projects
- better able to monitor performance and react quickly to issues identified
- in some instances deal with those problems before they occur - such as the need to raise finance or identifying potential cash flow difficulties
- set your targets and meet your objectives
- improve decision-making
- this gives you the freedom and confidence to plan for your business future
- enables the opportunity to improve/increase staff motivation
For further information concerning budgets, please visit the Business Link website at the link below.