Enterprise budgets are useful in any business that has more than one profit center. An enterprise budget represents an estimate of the receipts (income), costs, and profit associated with a single production cycle of a single product. Depending on the business, an enterprise budget is usually calculated on a per unit or per acre basis so comparisons can be made among different enterprises.
The information contained in these budgets can be used by the business owner and his/her adviser(s) in making important decisions about the business. Enterprise budgets are important tools because they identify, in a single place, the income and expenses (both fixed and variable) associated with a single enterprise and any by-products that result from the production of the primary product. In a business where there are multiple enterprises contributing to the bottom line, carefully prepared enterprise budgets can help determine which enterprises are most profitable, which are most labor-intensive, and which are of highest value.
Used appropriately, enterprise budgets are an excellent planning tool and well worth the time it takes to prepare them.
