Everyone knows that life is full of surprises, which by definition are unexpected and inconvenient. However, the costs have to be dealt with especially the business ones.
Many firms have extensive and expensive systems involved in the preparation of their business budgets. There are the basic costs we all know about and expect. It is the unexpected one that can cause havoc.
If yours is a new business it will be more of a challenge to prepare a meaningful budget. You will have past experiences to draw on but they are likely to be from quite different business activities which may not be applicable to your current venture. It may even be a new experience.
Some businesses go to extreme lengths to budget for all possible costs. Others merely say when they have enough funds to cover their likely costs and simply go for it.
That is all the planning that they do. They do not bother with the possible details. Others budget for all sorts of contingency costs and because of the amounts may not proceed with any proposal. Some would call that an excellent safety measure while I would simply call it nit picking.
You may need a full budget with best possible estimates for presentation to a committee to seek their approval to proceed. This is what needs considerable thought so that all likely contingencies are covered.
There is a lot of work involved in preparing such a budget, as if you get it wrong you will get the blame. That is best avoided if possible so get it right to start with.
The big question is what are the basic costs for your business? What period of time is to be covered? Once you have the ground rules in place it becomes realistic to calculate the likely costs. Are all the costs internal? In other words are they under your control.
If you are quoting for a fixed price with no possible variations, then to avoid any loss it is essential to allow a good margin for the unexpected costs which you can be sure will arise.
If on the other hand, you are allowed to claim some unexpected cost increases then your basic price can be realistic and lower than a fixed and final cost. There will be winners and losers in all pricing processes but rest assured you will be paying too much if the quote is fixed and final.
Unexpected costs can arise from all sorts of your activities. These include items and areas of possible cases which you have overlooked. That is quite likely if you digging for the smallest details.
Your thought processes will most likely be based on some past experience and that is what will cause the unexpected surprises as they surface. No matter how careful you are there are bound to be areas which you have overlooked and may come back to haunt you.
As noted earlier it is a matter of going over all possible areas of cost increases so that you are unlikely to be surprised by unexpected costs. Depending on the need for confidentiality it may pay to have a third party review what you have written. Theirs will be new eyes so they may find some gaps or areas you have overlooked.
If however the writing assignment is confidential you will have to take a different approach. Complete the draft and then put it to one side.
Go for a walk or do something else which is not connected with what you have written. After a suitable time doing some alternative minor task, return to your draft and read it again. If there are any gaps or faults they should be obvious so the draft can be amended.
I suggest you do this three or four times until you are comfortable with what you have written and you cannot find any more obvious gaps.
A third party may ask why you have noted some specific item. There may be areas which need more explanation and some which are simply not relevant without more background details.
You may well overlook these needs but like unexpected business costs they need to be allowed for and dealt with.