When we look at traditional budgeting practices, we can see that it's a
proven method that works and has been around for a while. Most
companies make a budget at the start of the year but sticking with it is
very tricky. It all depends on the economy and how well the business is
doing. If the company knows its revenue and the total amount of
expenses spent through the year, it can look over the data over a few
years to estimate the budget needed. Companies also have to take any
holidays or special events that cause them to spend more money.
Budgeting correctly will make the company more successful, avoid
unexpected expenses and possibly bring in more profits depending on
customers spending limits. Identifying the revenue and expenses can
help address any problem that could cause the company to fail below
the 30% recommended profit increase. The company needs to
determine whether to use traditional budget practices or other
alternatives based on the business's goals. Companies need to take into
effect sales growth and changes that could affect sales, such as
recession, inflation, and demand. While traditional budgeting is a great
way to plan and be prepared, it’s important to look at changes that are
happening throughout the year so that expenses and other fees don't
affect the overall budget at the end of the year. Lack of employment is a
huge issue in the economy; it’s hard to find good work.
Rygelski, M. (2018, January 5). Council Post: Budgets Don’t Work:
Here’s How Businesses Can Do It Differently. Forbes.
https://www.forbes.com/sites/forbesfinancecouncil/2018/01/05/b
udgets-dont-work-heres-how-businesses-can-do-it-
differently/?sh=2cb42dd846b8
Datar, S. M., & Rajan, M. V. (2018). Horngren's cost accounting: A
managerial emphasis, global edition, 16/E 12. PEARSON EDUCATION
LIMITED.
Ali, Rami. (2021). What a Budget Is and Why Your Business Needs One?.
Oracle NetSuite.
https://www.netsuite.com/portal/resource/articles/financial-
management/budget.shtml#:~:text=A%20budget%20is%20an%20es
sential,be%20invested%20in%20new%20opportunities.
