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(f) The minimum cash balance should be equal to one month’s operating expenses including
contingencies.
(g) A positive cash flow is essential to grow your business.

5. Marketing Budget: It is an estimate of the funds needed for promotion, advertising, and public
relations in order to market the product or service.

6. Project Budget:
(а) It estimates of the costs associated with a particular company project. These costs include
labour, materials, and other related expenses.

(b) The project budget is often broken down into specific tasks, with task budgets
assigned to each. A cost estimate is used to establish a project budget.

7. Operational Budget:
(a) An operational budget is the most common type of budget used.
(b) It forecasts and tries to closely predict yearly revenue and expenses for a business.
(c) It is a short term budget.
(d) This budget can be updated with actual figures on a monthly basis and then you can revise
your figures for the year, if needed.

Forms of budgeting process:
The two dominant forms of budgeting processes are traditional and zero- based. Business
planning is usually a combination of the two.

Traditional budgeting:

It is based on a review of historical performance and then the projection of such findings to the
future with modifications.

If inflation is high, for instance, cost trends of the last several years are projected forward but
with adjustments both for inflation and for projected growth or decline in business activity.

Historical sales patterns, using established trends in sales growth, are projected; new sales from
planned new product introductions are then added.

Zero-based budgeting:

It is the creation of a completely new budget from the ground up—as if no history existed.

When using this method, the operation must justify and document every item of expenditure
and income a new.