The purpose of a budget is to determine if the plans you have set in place for a specific time frame are achievable and profitable. A budget will also identify if you have a sustainable model. A budget allows you to determine your breakeven point. Working to a budget is a way to improve on, make cuts or increase the allocation of funds.
By reviewing historical data when you set your next budget, you can work with a solid foundation. This means greater accuracy to predict future expenses and profits.
At CMK, we provide our clients with summaries of their annual accounts which can be used to set key performance indicators (KPIs) for the next financial year. These KPI sheets allow a story to be built and told of the performance of the business against targets and budgets.
To break it down to the bare minimum, agribusiness budgets need to be straight forward, simple, and must cover the following:
● Income;
● Farm working expenses;     
● Interest and lease payments (principal);
● Drawings;
● Capital expenditure; and
● Tax.