If business development forecasts are inaccurate and groundless, then this is an assumption. They can lead to loss of profits and investors. Therefore, it is essential to carefully prepare a business plan and calculate the factors of influence. This can be achieved by critically evaluating the project and making two different budget options depending on the global and national economy. It is also valuable to anticipate costs such as rent, utilities, and insurance. Since it is challenging to predict profits, it is possible to form an approximate budget due to general expenses. Moreover, companies can find data from similar businesses and compare them for more significant financial forecast accuracy (Williams and Calabrese 128). Consequently, there is a noble chance that the average will indicate costs and revenues in the budget.
Each business that wants to succeed in the competition must have a strategic development plan. For this purpose, a year or a few months in advance, the steps to achieve the set goals are defined, considering the available resources and market opportunities. Forecasting budgets allows for showing the balance between the desired and possible (Williams and Calabrese 145). With the help of budgets, an organization can exercise control over various factors that affect the final result. Moreover, constant monitoring of finances allows to quickly respond to changes in the situation and take measures.
However, today there is a question about the possibility of effective budget planning under conditions of uncertainty. The situation in the market is unstable, so it is difficult to evaluate and predict costs and revenues. Therefore, companies are forced to adapt budgeting for the next year in the new reality to reduce unnecessary effort and frustration not only in finances but also in business. First of all, they begin to use the concept of more flexible goals and focus on external indicators: market share, profitability, and competition (Williams and Calabrese 151). The budget volume is also being minimized, with short-term perspectives replacing long-term outlining. Evaluation of risks also plays a vital role in developing a strategy to quickly re-plan the budget according to the situation.
Work Cited
Williams, Daniel, and Thad Calabrese. ‘The Status of Budget Forecasting.’ Journal of Public and Nonprofit Affairs, vol. 2, no. 2, 2016, pp. 127-160.