Setting budget goals and objectives, Financial Management

Setting Budget Goals and Objectives:

Having collected and analysed all relevant information, and made general forecasts as to the key areas of concern / opportunity and special circumstances for the coming year, the next step is to establish goals and objectives which would then form the basis for the actual figures contained within the budget itself.

Leaving aside revenue goals for the minute (given the goal of this module is the understanding of cost controls), some expenditure goals may be:

  • Reduce salaries by 10%
  • Reduce advertising costs by 25%
  • Reduce stationery costs by 50%

Whatever the objective may be, budget goals must be clearly linked to the overall strategic plan of the business and reflect the broader business objectives as outlined in the strategic business plan.

When undertaking budget planning, the key is take those action plans identified and developed in the business plan, and convert them into actual numbers for inclusion in the budget.

A budget that isn't based on goals will not provide the impetus for staff to achieve the broader business objectives set by the organisation.

When setting goals and objectives it is imperative that those goals be achievable. Where budget goals are set too high with no possibility of them being achieved, staff may be demoralised or simply disregard the budget. To ensure credibility, budgets must be achievable.

The challenge for the manager is to set goals that challenge the department or organisation to achieve them.

Other examples of budgets may include:

  • Special marketing campaigns
  • Business expansion plans (increased staff)
  • Refit of existing premises
  • Vehicle fleet upgrades
  • Total business IT upgrades

It is likely that project teams will be allocated to oversee the planning phases of the project as well as implementation phases. In most cases it will be the responsibility of these teams to ensure that expenditure budgets attributed to the project are not exceeded, and report any discrepancies to management for inclusion (if necessary) in total business budget reviews.

Posted Date: 10/1/2012 4:17:48 AM | Location : United States

Related Discussions:- Setting budget goals and objectives, Assignment Help, Ask Question on Setting budget goals and objectives, Get Answer, Expert's Help, Setting budget goals and objectives Discussions

Write discussion on Setting budget goals and objectives
Your posts are moderated
Related Questions
Various Types of Strategies Different types of hedge fund strategies are discussed as follows: Relative Value of Strategies: Relative value strategies are also known as no

The annual report and accounts for Astra Zeneca plc and Epistem Holdings plc and other relevant financial information are available in the ‘TMA 02 Resources folder' in the Assessme

Leveraged Buyouts (LBOs) A leveraged buyout is a financing technique where debt is used to purchase the stock of a corporation and it frequently involves taking a public compan

Organizational Cost Drivers It is the cost consequences that result from managerial choices concerning the company of activities as well as the involvement of persons inside an

Objectives and Functions of ASIC The objective of ASIC is to ensure the confident and informed participation of consumers in the financial system. To attain this objective, it

Explain the flow of goods and paper work in Diagram on Page 74 Ed. 10 [P. 70  in Ed. 9] of your textbook.  Explain a.  how the transaction would work without a Letter of Credi

Evaluation: Once all the possible events are identified, the next step in the risk management process is to evaluate the events. As stated previously, the evaluation process wo

The financial ratios of a firm are given:     Current ratio    =  1.33   Acid-test ratio   =  0.80   Current liabilities  = 40,000   Inventory turnover ratio = 6    What is the

Corporation - Form of doing business pursuant to a charter granted by a state or federal government. Corporations mainly are characterized by the issuance of freely transferable CA

annual uasage of stock 100,000units carrying cost per unit of stock RM2 order cost RM250 question there is a constraint arising from the floor space of the