Why Business Budgeting is Important?

It has been around five years since I embarked on the journey of annual operating planning -budgeting for Indian entrepreneurs. This initiative stands out as one of the flagship events organized by the School of Inspirational Leadership Aarambh, as it is named, originated with the goal of assisting entrepreneurs, particularly those in medium and small enterprises, in feeling secure and in control throughout the entire process of scaling up.

Entrepreneurs often lack clarity regarding the necessary expenditures and may remain unaware throughout the year that sales are not being accurately monitored. These challenges contribute to a significant dependency on the owner to oversee all aspects of the business. Annual planning involves engaging employees and key stakeholders in a structured process for the upcoming year, as opposed to merely discussing and simplifying matters. The Annual Operating Plan (AOP) employs various strategic tools, examining external and internal factors, market and industry conditions, growth rates, inflation, government policies, geographical expansion possibilities, product mix, and more. All these parameters are considered, encompassing people, execution, cash, and strategy, in a plan that spans 365 days and aligns with the organization's long-term vision.

Following the planning phase, it becomes crucial to translate these plans into quantifiable metrics. This conversion, often termed budgeting, enables daily and monthly monitoring, facilitating targeted reviews aligned with yearly goals. Monitoring people and evaluating performance becomes more straightforward. The focus then shifts to developing resources, constant review, and measurement post the annual planning process.

Aarambh, aptly named to signify a beginning, derives from the Sanskrit word meaning to start something new. The choice of 19 February for this event holds significance, as it marks the birthday of Raja Chatrapati Shivaji. He symbolizes the creation of a self-sufficient kingdom driven by governance and the dream of "swarajya" or one's own kingdom. Entrepreneurs today aspire to create their version of "swarajya," with the entrepreneur becoming the custodian of this realm.

In its fifth year, Aarambh began with 60 entrepreneurs and has now grown to include 300 entrepreneurs. Recognized by the MSMEs Government of India and Zee Business, the event has expanded its consultant and mentor base. Initially starting with four consultants and five CAs, it now boasts over 30 CAs and 10 budget mentors. Each table at the event is supported by a chartered accountant assisting with budget preparation, and around 10 mentors aid in the planning process.

Entrepreneurs are encouraged to involve their team members, including heads of HR, sales, and finance, in the Aarambh initiative. This inclusive approach allows teams to benefit from insights provided by various mentors specializing in strategy, product development, sales, marketing, operational excellence, and HR. The goal is to collectively build a more robust plan for the future. Therefore, I extend an invitation to entrepreneurs and their team members to be a part of Aarambh, as collective involvement enhances the potential for success.

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