Formulating a budget

It's easy to formulate a budget if you have a stable financial pattern that you only need to adjust.

But if many things are high-risk, experimental, or in start-up, you cannot accurately forecast income or expenditures. Estimate income on the conservative side. Count all your expenditure, even things you things you can absorb. Otherwise you'll be counting on wish-list funds.

• How could you trim costs? (Usually fairly easy)
• How could you increase income? (Usually fairly difficult unless it's a simple price rise.)

You should estimate both income and expenses, and account for different kinds of needs through the annual budget cycle.

You should present information in a way that helps managers to make decisions. That is, you should lay out records so that decision-makers can interpret them for use in developing policy and recommending future action.

Sooner or later, you will also want to make a schedule of specific payments. It will help you to:

• plan for higher expenditures,
• prevent cash-flow crises, and
• have a better idea of exactly where money is going.

Prepare the budget

1. Prepare a budget to reflect:
1. intended outcomes
2. organizational resourcing
3. budget limits and
4. forward planning priorities
2. Use a clear, standardized format
3. It is highly recommended that you run your final draft past a qualified accountant, especially if there are risks, e.g:
   • this is your first major budget, or
   • you are not basing your budget on a previous experience that is fairly similar, or
   • it involves large sums of money
4. Submit the budget for approval and get your supervisor or board to approve it. They might suggest modifications.
5. Communicate the approved budget to other staff for implementation. You may need to hold a briefing session and answer questions.
6. Keep records, including expenditure and costs. This is the bookkeeping; let your bookkeeper do that.