“Budgeting is a key component in management short and long term planning”

I agreed that budgeting is important to management short and long term planning. Budgeting is important to management as it helps people on making decision whether they have enough money to progress through to the next step of planning, expanding the business and earning profit for themselves. If budgeting or planning doesn’t exist in management, there is a risk on business spending more money than earning it, in other words, not spending enough money to expand the business and stay on competitive level.

Budgeting is also helpful in planning the years ahead. For example if a company are planning to purchase a new product, budgeting may help to decide whether how much money are needed to spend. All these planning takes time and money, so budgeting is a key component here by acting as a timetable on when the money is needed, how much amount is needed and what results to expect as the money and effort have been use on whether the company is making any profit.

Budgeting is an important planning tool, as other planning strategy such as marketing expenditures or salary levels failure to compromise it will affect the company planning term. So every decision must be well plan and decide to meet the objectives in order for the company to be successful. A budget also helps to keep track on the business whether the company is earning profit and making any necessary changes if needed.

If a new business doesn’t make profit within a couple of year or more then it is suggested to close up the business or start to plan any new strategy that will allow a business turnaround by earning money rather than losing money. Starting a business and can’t expect to have income within a short period of time such as a year or just six months, but this depends on what type of industry or business the company is