Create a blank budget
The benefit of starting with a blank budget is it will help you to examine your income and expenditure before entering them into your budget. By doing this you will be able to tailor your projected income and expenditure to meet your specific business goals and challenges.
- > Budgets help you to have control over your business by giving you the ability to plan ahead, flex with different business demands, and help you make better informed business decisions.
Budgets also have other financial impacts, such as, providing evidence if you apply for an overdraft or credit.
The steps for creating a new budget are similar for a blank budget and a budget that uses existing or revised data. Follow these steps to create a blank budget for a new financial year:
Step 1: Create a new budget
From the Cashflow screen select:
Main (the new financial year)
If you were setting up a budget around a specific scenario instead of the new financial year, for example, to forecast a specific payout amount then you would tick the New Budget checkbox and name the budget for it’s purpose.
Step 2: Bank balance and interest rates
If creating a main (financial year budget) the Opening Balance will automatically pull over from the closing balance of the previous year. You can check this and manually adjust any of the balance and interest rates to reflect your correct amounts/rates.
Click here for more information on editing these fields.
Step 3: Data for your new budget
--> Select leave Empty this way your budget will be blank with no data.
Step 4: Creating the budget
--> The benefit of starting with a blank budget is that you will examine your income and expenditure in detail before entering them into your budget and will be able to tailor these to your specific business goals and challenges.
--> Think about your business challenges and goals for the next year before you start entering information into your budget. You can use your last years income and expenditure as a guide.
Example Budget Scenario:
The milk payout has reduced significantly in the last year from $4.10 to $3.90. It is projected that low milk payouts will continue and this will have a major impact on income.
Farmer Joe has taken the payout situation into account for creating his new financial year budget. He has weighed up different business decisions, such as, diversifying, and instead has decided that he will reduce his expenditure to account for his loss in income.
Farmer Joe reduces his projected income to a lower payout of $3.80 for worse case scenario. He then looks at ways to reduce his expenditure and decides that he will reduce costs by reducing both the amount of bought in feed and fertiliser. He was hoping to buy a new tractor next year but will wait until milk prices improve before he does this. He will also consider reducing his staff numbers.
He can adjust his budget throughout the year depending on the milk price changes.
-- > Once you have a budget plan like in the example scenario, you can then enter the income and expense details into your budget.
Step 5: Save your budget
--> Review your budget and once happy save it.
--> Tip: If you have created your budget for the financial year you can lock it to avoid accidentally altering it later in the year by selecting the Save Original option. You can password protect your budget through this option as well.
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