What is a budget? Growing up, this term is used a lot around our households and around the business front to mean using money effectively. But what exactly does budgeting or budget mean? According to Njoroge Kibitu, a financial consultant and CEO of UPO Limited, a budget is a yard stick that allows you to measure yourself against your plan. It is a benchmark that allows you to know if you to know if you’re going in the right direction or you’re completely off plan.

To make sure that your business is not going off the rails, you have to keep one. It allows you to keep track of your goals. It enables you to make sure that the organisation is prepared for the future. Remember the saying that cash is king? We create wealth not just for the sake of it, but so that we can be able to do the things we are passionate about, for the future and for turbulent times to come. A budget helps give us this freedom.

When creating your budget, Njoroge advises that you do it away from your office, away from the busy work environment. Go somewhere where your mind is clear. Go back and check on what your company has done in the previous years. Check on the revenues, the expenditure and who owes you and who you owe. Be clear on the cash, not hope. Go with the real figures according to your books. Be tight on the revenue projections.

Lastly, know the purpose of the budget and what role each member of your staff plays in managing that budget.

Njoroge Kibutu was a facilitator at Un.thinkable masterclass (our quarterly 10X Growth Leaders Workshop) in March 2020. Click here to apply for membership in Un.thinkable.