Creating a Budget
3. Understand what is going in and what’s going out
To truly create an achievable budget, you first need to understand what’s coming in in terms of income sources, and what’s going out in terms of expenditure. This ensures you set yourself up for success by considering whether your budget is realistic and viable, consider what financial options you may need to ultise, and consider expected costs, including staffing and materials.
4. Decide how to create your budget
Types of cost: Fixed & variable
There are multiple ways to create a budget, such as incremental budgeting, which is based on the previous year's figures or zero-based budgeting, which starts from scratch whereby you need to consider each cost from the start of the year. Which ever method you choose, you will need to ensure that the budget is prepared in the same format that is used for reporting in the upcoming period, and that an underlying list of assumptions should be prepared and documented as part of the budget creation process.
Fixed Those costs that will need to be met, and are static, such as permanent-colleague- related costs. Variable Those costs which fluctuate and dependent on level of work, such as qty of materials and products purchased, or ad-hoc advertising costs.
Future Practice Owner.
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