The Importance of Budgeting
Why budget? The benefit of budgeting is that it makes you think through the process of how to achieve a particular end result. It is an expression of the goals of your business. There is a saying that is true for the business enterprise - "if you aim at nothing, you are sure to hit it". The achieving of major milestones in your business are generally not an accident, but the result of clear objectives, good planning, actively improving the way you do things and hard work.
What is it that you want to achieve in your business? Is it possible? What are a few things you can do in the next year that are the first steps towards your objective?
Many factors affect the profitability of the farming business, but having a clear cashflow plan and a method to compare budget to actuals is one major factor which assists the entrepreneur to make good decisions for the profit of the business.
There are additional situations apart from management where budgets are required. One is the bank requirements for finance, another is application for government funding. Centrelink will also require a budget for the application of the Farm Household Allowance.
If you are serious about your farming, it is good management to have a budget.
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