question archive A manager of a small business made the following comment when a friend suggested that his business could benefit if he were to prepare cash budget
A manager of a small business made the following comment when a friend suggested that his business could benefit if he were to prepare cash budget
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A manager of a small business made the following comment when a friend suggested that his business could benefit if he were to prepare cash budget.
"Some people think they are alright but I run only a small business and I don't want to waste my time preparing budget which, after all, are just best-guessing the future. I am more interested in what actually happens, not what I think might happen."
Do you agree with him? Why?
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Answer:
No.
If you fail to plan, you plan to fail. Cash budget can be considered as a plan what you want to achieve regarding the sources and uses of your cash. Thus, it will help you as a manager to check if you are on the right track, if you were able to achieve the plan (budget). Therefore, i do not agree that preparing a budget is a waste of time because as mentioned above, a cash budget is very useful in achieving your desired objective(profit) for the business.
