ECONOMICS

Detailed explanation-1: -Why are budgets useful in the planning process? They enable the budget committee to earn their paycheck. They help communicate goals and provide a basis for evaluation. They provide management with information about the company’s past performance.

Detailed explanation-2: -In most cases, it can be the single most important factor in determining how effective the company is at meeting its goals. For one thing, budgeting helps formulate the company’s activities, allowing it to better understand priorities, figure out how resources can be allocated, and which areas need to be reevaluated.

Detailed explanation-3: -A business budget is a spending plan for your business based on your income and expenses. It identifies your available capital, estimates your spending, and helps you predict revenue. A budget can help you plan your business activities and can act as a yardstick for setting up financial goals.

Detailed explanation-4: -Why are budgets useful in the planning process? They help communicate goals and provide a basis for evaluation.

Detailed explanation-5: -Using your organization’s budget as a communication tool allows you to vocalize ideas and strategies to your employees, board, and potential funders (“stakeholders”) in a quantifiable way. It will also encourage you to articulate and quantify your goals to yourself (important, but maybe less obvious).