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Discuss why small businesses might not choose to extensively engage in the budget process.  Also discuss the various benefits of budgeting and state whether it is likely that a small business can reach their goals without engaging in some kind of budget process.

Question

Discuss why small businesses might not choose to extensively engage in the budget process.  Also discuss the various benefits of budgeting and state whether it is likely that a small business can reach their goals without engaging in some kind of budget process. 

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Step 1

Budgeting is an important part of the business process. Without budgeting a business can not track it’s process and improve its performance. It is the process of estimating the revenue and expenses of a company for a specified period of time in future.

Step 2

Answer:

In small organization preparation of formal budgets is a rarity. The small organizations usually have an individual owner or a manager who prepares the budget of the organization mentally. The person mentally calculates the expected sales, financing, cost and other needs of the business. Small business often considers budgeting as a time-consuming process and it also involves huge cost in preparing the budget.

Step 3

Benefits of budgeting:

Budgeting helps in planning and controlling. It is the most effective way to control your money. The various benefits of budgeting are:

  1. It gives a control over the money- Budgeting helps in adjusting of the funds, if they are lacking. It helps in deducting the short-term funds in order to enjoy long-term benefits.
  2. It helps in the organization of company’s spending and savings- Budgeting helps ...

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