Creating an Effective Business Plan

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             A budget provides information on how to implement short and long term strategies in consistence with the objectives of the company concerning capital expenditures on assets and on the expansion of the business. Long term strategies provide a plan for the company's future financial expansion and growth and the purpose of their establishment is to set financial milestones that rest successfully within the company budget. Short term operating plans culminate the capital budget process and generate the decision-making that supports the recommendation. Short term operating plans and long term strategies both focus on the company's financial health and both aim at maximizing efficiency in capital use in order to expand company operations and create shareholder value. A budget ensures that the financial position of the company advances its overall short term operations and long term strategies and provides the foundation required to achieve the objectives. Lack of a budget impairs the ability of a company to conduct short term operating plans and to implement long term strategies because management of funds is vital to paying for the short term operating plans that can be used to achieve long term strategies [Bec08].
             Budgets are used to monitor and evaluate performance by being the yardstick upon which the actual results of a company are used to guide both current and future decision making processes and hold managers accountable for performance. The role played by budgets is the provision of independent verification through reconciliation by journals and summary of expenses and revenues in financial control. Budgets give managers the ability to accurately assign costs of products and activities.