Sometimes assimilated to the Business Plan, the provisional budget occupies a central place in the process of development and emergence of a company. It allows you to anticipate the future results of your activity based on a realistic estimate not only of your expenses, but also of your company’s income.

This very important exercise helps you plan for your cash flow needs. Each entrepreneur will have to make it their own to ensure their success.

The provisional budget is useful when it comes to revising your objectives upwards or downwards. Also when you need to find solutions to motivate your team members.

A good knowledge of the market in the preparation of a provisional budget is very important, this is the reason why we must understand what we are talking about. In this article, we are going to give you some tips for the success of your business.

What Is a Provisional Budget?

Whenever we talk about a provisional budget, it is an accounting forecast table in which we find all the expenses (charges) and all the receipts (products). It is an essential management and decision-making tool to move forward peacefully while keeping an eye on your cash flow. The expenses and receipts, related to your project, count for the current fiscal year or the one to come. As a reminder, the fiscal year or period in question generally Niger Email List corresponds to a calendar or fiscal year.

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The roadmap of a company
By provisional budget, we must also understand a roadmap that a company must follow throughout the year. Moreover, the provisional budget is in no way the business plan of the company.

If the forecast budget refers to a financial forecast for one year, the business plan for its part emphasizes the detailed study of the market and the organization of your company. The latter includes the strategies that your company will have to employ in future years, while the provisional budget is a precise detail of the current year.

Why Establish a Provisional Budget?

It is the guarantor of the financial health of your business. It will allow you to check the profitability, credibility and performance of your project. For all this to be possible, it is necessary to take into account the actual and projected figures as well as the forecast income statement.

Excel software
A spreadsheet is the essential tool that allows you to establish your estimated budget example. Know how to use this tool, which will allow you to list, identify and make a precise classification of your expenses and your receipts.

Once mastered, it will be easier to make changes or adjustments to your account in order to achieve balance or even generate a margin. If you do not make a financial forecast, you risk facing a financial deficit, because you will not know if you are lacking in revenue or if your expenses are too high. But it is not enough to make a forecast and say that everything is settled. This document should serve as a reference for the company throughout the year, you should even be able to consult it at any time if necessary. If only one element were to be modified in the table, it could seriously impact the whole process.

To illustrate, consider the estimated budget of a supplier who improves their delivery, which increases their costs by 20%. Before doing so, he must first check whether his cash flow allows him to finance this expenditure, without negatively affecting the balance. The study of his estimated budget must give him precise information and he will be able to take this decision without endangering the company.

How to Establish a Provisional Budget?

Budgeting is not something to be taken lightly, but neither is it a complex exercise. To do it well, you simply have to include all your expenses and income.

Your table must be readable. To make it easy, it is better to divide it in two and proceed sector of expenditure or revenue after sector. If you categorize your items by sector, it will be easier and faster to identify which ones improve profits or which increase losses. You can easily decide to cancel certain investments if you realize that your turnover is not increasing.

What are the expenses to be expected?
The expenses that can appear in a provisional budget are numerous, but let us retain the most relevant.

• Taxes and duties

• External charges such as rents, advertising, insurance, etc.

• Operating expenses, this can be a question here of subcontracting or supplies

• Financial charges such as bank loans

• Employee costs, purchases of supplies (everything relating to water, electricity, administration, maintenance, etc.)

What are the expected revenues?
Among the major sets of revenue that should logically appear in the provisional budget are:

• The provision of services or the sale of goods

• Aid of any kind and subsidies

• Financial products (stock market investment)

When to establish a provisional budget?
Budgeting can often be seen as the last step in a business plan. This article shows you the importance of it, so it must appear in your presentation without being exhaustive, otherwise your project will not have any success in front of potential investors.

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