Budgeting is a valuable tool for business developers. It is used to estimate future income and expenditures for a project of business. Budgeting can take many forms and is used to answer an array of economic and financial questions. For example, budgeting can be used to estimate profitability under an array of price and production assumptions.

Understanding Partial Budgeting provides you with a method for estimating the profitability of a change in your business. A worksheet on Partial Budgeting is provided to help you make the estimates for your business.

For more information on this topic, see the links listed below of articles posted on related Web sites.

Understanding Budgeting

Partial Budgeting

  • Partial Budgeting for Agricultural Businesses – Pennsylvania State University – Partial budgeting is a planning and decision-making framework used to compare the costs and benefits of alternatives face by a farm business.
  • Partial Budgeting Form – Colorado State University Extension -- Many changes do not require a complete farm or ranch reorganization.

Breakeven Analysis

  • Estimating Breakeven Sales for Your Small Business – Purdue University Extension – The breakeven sales is the level at which you neither make a profit or a loss.
  • Break-even Method of Investment Analysis – Colorado State University Extension -- A break-even point defines when an investment will generate a positive return.
  • Will My Business Make Money? – NOLO Law for All -- Prepare a break-even analysis before spending time on a complete business plan.
  • Breakeven Analysis – CCH Business Owner’s Toolkit -- A second tool for management decisionmaking that has grown out of cost/volume/profit analysis is breakeven analysis.
  • The HBS Toolkit: Break-Even Analysis – HBS Working Knowledge – Marketers studying the launch of a new product or service use break-even analysis to help determine at what point the product or service can be expected to be profitable.
  • Operating Leverage – CCH Business Owner’s Toolkit -- Once you've determined your breakeven point, you can use it to examine the effects of increasing or decreasing the role of fixed costs in your operating structure.
  • Sales Volume Breakeven Analysis – CCH Financial Planning Toolkit – Find out how many and what price you must sell your product at to make a profit.

Contribution Margins

  • Contribution Margins – CCH Business Owner’s Toolkit -- One of the important, yet relatively simple, tools afforded by cost/volume/profit analysis is known as contribution margin analysis.

Capital Budgeting

  • Capital Investment Analysis and Project Assessment – Purdue University Extension – Presents two phases of project assessment: economic profitability and financial feasibility.
  • Deciding to Make a Major Purchase – CCH Business Owner’s Toolkit -- Among financial types (like your banker or accountant), the main consideration is usually that the item or project will have a service period of more than a year.

Budgeting and Your Company

  • Budgeting Systems – Small Business Notes -- Budgeting is detailed planning for the allocation of funds in a business.
  • How to Make a Budget and Stick with It – NOLO Law for all -- A realistic budget is your best weapon against overspending.
  • Why Budgeting Kills Your Company – HBS Working Knowledge – Why doesn’t the budget process work?  Read what experts say about not only changing your budgeting process, but whether your company should dispense with budgets entirely.
  • Why Corporate Budgeting Needs To Be Fixed – HBS Working Knowledge -- Not to mince words, but corporate budgeting is a joke.  The problem isn't with the budget process—it's when budget targets are used to determine compensation.

Links checked July 2014.