Question

Explain the importance of budgets in planning for the decision makers.

Please help me answer in your words

Answer 1

With a solid plan in place, all decision makers are working towards the same goal. In addition, the budget improves performance evaluations – providing a common base for discussion on how well the manager met his goals and providing a talking point concerning why actual results veered from the original budget.

In addition to being an important part of the planning process, budgets are necessary for evaluating the performance of your company over the course of each fiscal year. Part of budgeting responsibly is tracking actual result and comparing them to what was budgeted.

Through budgeting, a business makes decisions on how to move forward. Budgeting can be done by individuals or teams, depending on the size and character of the organization. By forecasting funds, prioritizing projects and allocating money to different sources, a budget is the backbone of any good business plan.