Business Budgeting for Beginners
If the idea of creating a budget for your business, department, or project seems overwhelming, this course will alleviate all of those fears. Taught in an approachable and relatable format, this course walks you through the budgeting process so you can go from numbers averse to budgeting super-hero. The downloadable templates included in the course allow you to easily and quickly take what you learn and apply it to your job. The storytelling used throughout the course makes the topic more approachable and engaging so you can obtain the soft skills that will help you be successful implementing and tracking a budget in the real world. And finally, the course challenge is something that will pique your curiosity at the beginning of the course and provide motivation to complete the course and continue learning the material.
A company's budgeting process involves a lot more than just rows and columns of numbers on a spreadsheet. The reality is that budgeting is a sometimes organic and sometimes organized process. Most often, it's an equal mix of both in an attempt to add some level of certainty to an uncertain future. These processes are what we are going to explore in this course. You will be introduced to different strategies employed during the budgeting process, the techniques and tools that are commonly used to make budgeting forecasts, the components of a basic operating budget, and how businesses make certain decisions that may impact their budgeted amounts.
What you will learn
- Learn about planning strategies and how they are used to keep a budget aligned with its vision
- Obtain knowledge of cost behavior and how forecasts are used to ensure accuracy in future planning and budgeting
- Develop various approaches to plan for general and administrative expenses
- Gain tools and techniques used for a formal decision-making process
- Master how best to evaluate the financial stability and performance of a business using budgeted information
How you will benefit
- Learning how businesses think about budgeting will help you to make informed predictions about the future with strategic planning
- Become more valuable to your employer or business by accurately budgeting costs
- Make better business decisions with the knowledge about how businesses use budgeted data in combination with a formalized decision-making process
- Increase success in your career with the skills, techniques, and tool kit provided by this course
How the course is taught
- Instructor-led or self-paced online course
- 6 Weeks or 3 Months access
- 24 course hours
In our first lesson, you'll explore how budgeting at its core is a process of looking forward. It's about making informed predictions about the future. Next, you'll see how a company's vision can lead to setting goals for the company. These visions are often aspirational and state the path for where the company plans to go in the future. Then, we'll also start the conversation about the human side of budgeting.
In Lesson 2, we'll begin to look at various budgeting strategies, including strategic, capital, and operations budgeting techniques. This lesson will include some real-life examples of planning activities, but to further bring these concepts to life, we'll also highlight a fictional company, Curly's Pool Service and Supplies. We'll finish Lesson 2 by helping Curly formulate some plans and budgets!
This lesson will focus all on sales, specifically the role that sales play in the budgeting process. We'll examine the best practices for compiling a sales forecast and how to increase the chances that the sales forecast will actually mimic real life. We'll also discover how to create an inventory that needs a budget to determine just how much inventory to purchase based on a sales forecast. Finally, we'll discuss how to formulate a labor requirements budget to accurately project just how much labor you may need to employ to meet the needs of the company, again based on the sales forecast.
In this lesson, we are going to detour a bit from the actual preparation of a budget and dive into how certain types of costs behave. Understanding how costs increase or decrease relative to an activity is an essential part of learning how to accurately budget for costs in a business. So, in the upcoming chapters, you're going to discover how to distinguish between variable, fixed, and mixed costs. We will use these cost types to calculate the contribution margin for the business. Then, we will show you how to use contribution margin to make certain predictions and decisions in a business. Most notably, you'll see how to use contribution margin to calculate the all-important break-even point and margin of safety for a business.
Lesson 5 will be a continuation of our discussion about cost behavior. In this lesson, you're going to explore how to evaluate a company's sales mix and how to calculate operating leverage using tools given throughout the course. Operating leverage is just another key component of cost analysis that will allow you to, once again, easily make projections about the future. We'll end the lesson with a discussion about how companies set prices for the products and services they offer. You can probably guess that this process is a bit more involved than just selecting a price out of thin air. It's actually an essential part of a company's overall budgeting process and should not be taken lightly.
In this lesson, we'll examine the steps needed to build both a direct materials budget and a direct labor budget. We'll also examine how a manufacturing company budgets for manufacturing overhead. All of these components are key to developing an overall production budget for a business that manufactures a product. Finally, we will end this lesson by describing the components of a production budget.
In this lesson, we'll discuss how to prepare a complete cash budget for a business. You'll get the chance to take an even closer look at how a company might forecast cash collections from credit sales and cash payments on credit purchases for big-ticket items like inventory or other expensive capital projects. We'll even take a look at how some companies mitigate the risk of running out of cash by utilizing lines of credit and other sources of cash instead of just relying on cash generated from sales.
In Lesson 8, you'll learn some of the basic methodologies that can be applied in many different capital budgeting scenarios. We'll begin with an explanation of a technique that does not include an evaluation of how time impacts the valuation of money. Then, you'll learn how the passage of time and its impact on the value of a dollar is incorporated into capital budgeting decisions. Since capital projects often span years, or even decades in some cases, the time value of money is key to improving accuracy in budgeting for capital projects. The lesson will finish up with a thorough review of, perhaps, the most common technique that is used in capital budgeting decisions: net present value.
In this lesson and the one that follows, we're going to explore how businesses use budgeted data in combination with a formalized decision-making process to improve their chances of making better decisions. For a business, a better decision is one that maximizes profit and aligns with the company's goals and values. We'll start with an examination of what types of budgeted information are relevant to making a decision and what types of information you can ignore. You'll see the differences between quantitative and qualitative information and how each can be used to improve decision-making. Then we'll finish up with an example including some specific steps you can use as a model for making better decisions.
In this lesson, you'll continue to practice with these same techniques by applying them to a few other common business decisions. You'll start by examining how a business uses budgeted information to make the choice to replace an existing asset with a new asset, such as replacing an old piece of manufacturing equipment with a brand-new one. Next, you'll explore how a business might use budgeted information when deciding whether to eliminate a product or service that it offers. We'll finish up the lesson by examining one of the most critical business decisions you'll ever need to make: how to allocate your most scarce resource to maximize profit in your business.
In this lesson and the one that follows, we will focus on how best to evaluate the financial stability and performance of the business using budgeted information. We'll start by taking a close look at using the components of a company's operating budget to compile the pro forma balance sheet. Next, we'll examine the steps needed to prepare the pro forma income statement, again by using the information found in many of the other operating budget components. To finish up the lesson, we'll dive into some straightforward techniques that are useful to evaluate the balances found on the pro forma balance sheet and income statements.
In our last lesson, we'll spend more time on the budget evaluation process by examining how companies use variance analysis to evaluate differences between actual results and the budget. To keep things manageable, we'll stick to the basics here so that you're equipped with some tools to take with you when applying these techniques in a real company. As part of this process, we'll take a look at how budget variances are defined and interpreted. Then, we'll discuss some techniques like flexible budgeting to evaluate and isolate certain budget fluctuations in a way that provides clarity to a business owner or manager. We'll finish up the lesson with a brief discussion of the budgetary control process and the soft skills needed for this process.
Scott Paxton is a Certified Public Accountant and holds master's degrees in business administration and accounting. His background includes experience as a public accountant, a manager in the banking industry, an entrepreneur and a college business instructor. Paxton has also spent much of his career helping small business owners successfully optimize their business operations, budgets and strategic plans.
- This course can be taken on either a PC or Mac.
- PC: Windows 8 or later.
- Mac: macOS 10.6 or later.
- Browser: The latest version of Google Chrome or Mozilla Firefox is preferred. Microsoft Edge and Safari are also compatible.
- Adobe Acrobat Reader.
- Software must be installed and fully operational before the course begins.
- Email capabilities and access to a personal email account.
There are no prerequisites to complete this course.
Instructional Material Requirements:
The instructional materials required for this course are included in enrollment and will be available online.
Instructor-Led: A new session of each course begins each month. Please refer to the session start dates for scheduling.
Self-Paced: You can start this course at any time your schedule permits.
Instructor-Led: Once a course session starts, two lessons will be released each week for the 6 week duration of your course. You will have access to all previously released lessons until the course ends.
Self-Paced: You have 3 month access to the course. After enrolling, you can learn and complete the course at your own pace, within the allotted access period.
Instructor-Led: The interactive discussion area for each lesson automatically closes two weeks after each lesson is released, so you're encouraged to complete each lesson within two weeks of its release.
Self-Paced: There is no time limit to complete each lesson, other than completing all lessons within the allotted access period.
Instructor-Led: The final exam will be released on the same day as the last lesson. Once the final exam has been released, you will have two weeks plus 10 days (24 days total) to complete the final and finish any remaining lessons in your course. No further extensions can be provided beyond these 10 days.
Self-Paced: Because this course is self-paced, no extensions will be granted after the start of your enrollment.