A budget is one of the most important tools in managing the profitability of a business. There’s a saying “If you aim at nothing… you will reach the target with amazing accuracy”
A budget gives you something to aim for. It helps you to see clearly what sales are needed to cover overheads and costs and make profit. It enables you to do ‘what if’ scenarios i.e. what will be the impact on profit if sales increase or drop?
CFOs cut their teeth on budgets and know how to set them up with realistic expectations. They know what costs and expenses to apply to targeted sales. They know how to then use the Budget once it’s set up to ensure you end up with the desired results. The problem with most budgets is they get set at the start of the year… then promptly forgotten when day to day events take over. A CFO ensures this doesn’t happen.