“What is budgetary,” some ask this question when they find that a budget has to be established for every single project in order for any business to function properly? A budget is a systematic financial plan for a given period, usually one year, sometimes longer. It will also include revenue estimates, expenditures and projected sales volumes, resources, costs and debts, assets, liabilities and netbacks. The key to a successful and balanced budget, of course, is having a good understanding of both ends of the spectrum. The budget, therefore, must take into account everything from marketing to operations to finance.
How do you know what is budgetary, however? First of all, you must know what is not. By “not” here are meant those activities which are not essential to the success of the project. These activities are what create a waste of money, unless they are planned as an annual operation or if they are part of a pilot program. If these activities are part of your budget, then what is budgetary can be deduced as the amount spent on non-essential activities for the year.
A budget, then, is simply a tool for planning. One can say that the budgeting process is incomplete without it. There are two basic types of budgets: the financial budget, which give you the income figures for the year; and the operating budget, which tell you how much money will go out for operation and what will come in for the coming year, sometimes with a balance sheet. The financial budget is often called the income statement budget, and the operating budget, the cash flow budget.
To determine what is budgetary, then, you must have a very clear understanding of the project. How is the current project tied to previous ones? Is one project just a test, or does it have real world applications? When you know this, you can determine what is budgetary, because the budget will tell you how much is going to be spent on this project.
Now, you should also have a pretty good idea of what you want your final product to look like. This is usually indicated in the term “phase one” or “stage one.” This will help you determine what is budgetary, because you’ll know what you can spend each year to get there. Usually, the most important factor in deciding what is budgetary is whether or not the concept matches what the stakeholders want. If the stakeholders want the concept to be different, then it needs to be changed in the budget, but if the concept matches what they want, then you don’t need to change the budget.
Once you’ve determined what is budgetary, you should be able to tell what the problem is. In other words, you should be able to figure out what is wrong. For instance, if you know that the stakeholders want the product to have more flexibility, then you know that if you add flexibility to the design or the process, then you are likely going to have to increase the budget for it. However, if you add too much flexibility, you might end up cutting corners elsewhere, which isn’t helpful to the stakeholders. So, you should always try to figure out what is wrong and what can be added to fix it.
Once you have figured out what is budgetary, you should be able to estimate what the risk factors are. This can be done by asking yourself questions such as: what is the expected number of rejections when using this process? What are the risks of having too many rejections? What are the risks of having too few approvals?
These are just some of the questions you should ask yourself when you are asking what is budgetary. If you can answer these questions well enough, then you will have an idea what you need to do in order to make sure that the project is on track and that you can afford it. If you are not good at estimating, then hiring a project manager would probably be your best option. They will know what is budgetary and what needs to be fixed or added, based on what you tell them. You can save a lot of time and money by doing this upfront.