Annual Budget

Going into each year, a company (or a person, or any other organization for that matter) will outline what it expects its spending to look like over the following 12 months. This projection is the annual budget.

The budget typically gets worked out based on educated guesses about what revenue will look at for the year. It also includes assumptions about what the goals are for the upcoming 12 months, taking into account things like whether a new international expansion is planned or whether a new product launch is scheduled.

Obviously, a lot can happen during a year, so annual budgets often get revised as the year moves on. In a corporate scenario, these reviews usually happen on a quarterly basis, as the company reacts to revenue realities and tries to take advantage of opportunities that arise unexpectedly. So, in that way, the annual budget becomes more of a guideline, or sketch, for the year ahead and is not considered set in stone.