In recent years, farm and ranch management has become more difficult and challenging as a result of rapidly changing production and economic conditions. One of the most helpful practices a manager can adopt is to plan for the future, particularly an uncertain one. Even a poor plan is better than no plan when heading into a new operating season. Planning includes taking an inventory of resources, devising alternate uses for these resources, estimating costs and returns associated with the alternate uses of these resources, and choosing the best alternative.
Budgets help the manager to organize financial and physical planning.
By employing budgeting principles, a manager can compare costs and returns of alternative plans of action for a farm or ranch business. Ideally, a manager should be able to choose a course of action that most nearly matches long-range goals. Types of Budgeting Several basic budgets are available to help managers in the decision making process. Each budget is specific in its application, but each uses the same principles. Another budget is the family living expenditure budget.