Definition of ‘Budget’
A budget is a financial goal that a business has set itself, it is where you would like the business to be. A budget is normally prepared each year and sets out the intentions of the business for the next year.
For example, a business might have a target revenue they are aiming for over the next year of 250,000, this would be classified as a budget of 250,000.
Without a budget the business has no target to aim for, a bit like starting out on a journey before deciding where you are going.
A budget is not a forecast, a budget is where you intended your business to go, a forecast is where you think your business is going.
Template Budget Definition
The financial projections template uses the word projection, as the purpose of the template is to allow various hypothetical ‘what ifs’ to be trialed for a business. However, if one of the ‘what if’ versions reflects the current intentions of the business then if can be referred to as a budget and the template used as a business budget spreadsheet to set out intended plans for the next 5 years.
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