Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsFinancial Guide for SMEsChapter Three - BudgetingA budget is the future financial plan of the business. It is where the strategicplans are translated into financial numbers to ensure that these plans arefinancially viableTopic Hint TipProfit and Loss Budget By preparing a profit and loss budget annually, you will be in a An independent profit and loss budget can bedeveloped for separate projects to assess theposition to determine if your future financial viability of each projectbusiness plans will support theongoing activities of your businessAssumptionsAll assumptions made during theplanning process of preparingbudgets should be realistic anddocumentedWhen documenting your assumptions, includeboth the risk assessment of each assumption andthe anticipated action required to match the risk.By doing this, you will be well prepared and havean action plan already in place if the actual eventsdo not match your assumptionsMonitoring andManaging Your Profitand Loss BudgetRemember, the more regular thereports, the faster operations canbe reviewed for financial impactand action can be implementedimmediately whenever requiredRegular review of budget against actual resultswill provide information on whether your businessis on track to achieve the plans formulated whenyou first prepared your budget170170 157chapter 7-13 p79-181 Eng.indd 1708/15/11 5:03:11 PM