Increases profit: Creating a yearly budget increases profit in a business by allocating finances in areas that are likely to increase revenue.Ī yearly budget can help steer a business in the right financial direction and stimulate growth.A yearly budget can help a business person to calculate the expense variances, which can either positively or negatively impact the business. Enables a businessman to calculate variances: Variances are the differences between actual and projected costs.The evaluation and comparison help keep track of the increase in revenue and expenditure, which affects the business’s operational costs and helps create a sound financial plan. Evaluates annual revenue vs expenditure: The yearly budget evaluates the use of revenue and expenditure in a business and enables a business person to compare it to the previous year.The information is then used to allocate money for adequate use in the business. Provides financial picture: A yearly budget provides a pre-set list of the projected and actual expenditure and revenue and their difference.The following are reasons why a business person should consider having an annual budget: The budget can break down and distribute money to improve the financial state of a business. A yearly budget provides a person in business with a clear understanding of the expenses and revenue generated by the business.
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