A well-constructed and carefully laid out budget is an essential part of any project since it helps to allocate the key resources and costs in an orderly fashion. Thus, key risks can be avoided or balanced out with the help of appropriate techniques (Hilton, 2016). As a former teacher at the Rancho Solano Private School, I will have to admit that even small entrepreneurship and family businesses have to develop a sustainable budget; otherwise, they are most likely to fail due to the unpreparedness for risks (Hilton, 2016). By using flexible overhead budgeting and responsibility accounting, one can calculate approximate risks and avoid impediments to the successful management of a business.
As the experience of providing piano lessons in a local school has taught me, locating immediate costs accurately and estimating every possible expense is barely possible. Therefore, the introduction of overhead budgeting is needed. At the Rancho Solano Private School, flexible overhead budgeting was used due to changes in the number of students and the issues associated with the purchase of updated teaching tools, as well as the necessity to offer teachers training courses and other competency improvement programs (Samuelsson, Andersén, Ljungkvist, & Jansson, 2016). Therefore, the general impression of the approach used at the Rancho Solano Private School to manage budget issues is quite positive.
However, in the future, the school may require an improved performance reporting approach as well since it may expand and offer its services to a broader range of audiences. As a result, immediate risks and challenges will multiply, causing the organization to suffer greater expenses. In turn, by utilizing the balanced scorecard approach, the school will be able to keep its performance rates high and reduce the risks (Hilton, 2016). Therefore, incorporating the two strategies into a single framework may be needed in the future.
Reference
Hilton, R. W. (2016). Managerial accounting: Creating value in a dynamic business environment (11th ed.). New York, NY: McGraw-Hill/Irwin.
Samuelsson, J., Andersén, J., Ljungkvist, T., & Jansson, C. (2016). Formal accounting planning in SMEs: The influence of family ownership and entrepreneurial orientation. Journal of Small Business and Enterprise Development, 23(3), 691-702. Web.