Budgets estimate both your revenue and expenses for the year. It is a quick snap of your financial goals and shows how you plan to allocate your resources. It is a powerful tool because most of your financial statements are compared to your budget (which can be broken down month to month).
Your budget can operate as your business blueprint and help you to make important decisions about where you are allocating your resources and where what your revenue goals will be. Your budget can help you to determine how to spend your revenue for marketing, operations, sales etc.
In creating budgets, you can look to see what was created in the past and use that as a template for the upcoming year. However, for businesses in their first year, budgets can be created with educational estimates in mind. Looking at typical costs and trends in sales will help to determine your budget for a business that is just getting started. Although budgets typically are not redone once set, they are also to be looked at with flexibility. Use it as a tool for a benchmark knowing that expenses and revenue will vary and keep in mind that this tool is there to help you meet your business goals. If you see that changes need to be made, discuss this with your CFO.
Why do I need a CFO?
You didn't start your business or become the head of an organization because you are a financial expert. You are there to grow and succeed. The accounting, bookkeeping and financial aspects of your business are important to how you run your company, but it is time consuming and if not done properly, can lead to more headaches down the road.
Keeping track of your bookkeeping and your financial statements is time consuming and difficult to manage. But most frustrating is understanding and interpreting your financial picture from reports. CFOs are responsible for timely and accurate presentations and financial reports in order to capitalize on your growth.