Q: I’ve just realised my business is over our budget. What might some of the reasons for this be?
Mar 31 2010
Answered by: Ashley de Safrin Ask a question
The main reason for being over budget is a failure to set realistic budgets in the first place. If you do not research the costs properly and end up guessing amounts, then you should not be surprised that things actually cost more than you forecast.
Good record keeping and regular checks of actual figures to forecast will allow you to catch overspending early and to take corrective action before things get out of hand. You will also need a business plan to allow you to compare actual figures to forecast. Without a plan, you won’t know whether you are on course or not.
Have a process in place so that you know not only what you have spent but also what you are committed to spending. Ongoing costs like rent, heating, telephones etc will need paying at regular intervals and are known ahead of time. Make sure you put these in a budget and cash flow forecast so you can predict problems, and when they are likely to occur, in advance and don’t forget to allow for delivery and other costs on materials you buy in.
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