21.10. Case Study: Budgeting in a Software Startup

Try these first

1. 1.

   What is a budget?

   Hint

   Think about what a budget quantifies.

2. 2.

   What is the purpose of using a sales forecast?

   Hint

   Consider why knowing future revenue is useful.

3. 3.

   What is a budget primarily used for?

   • Estimating future sales only
   • Planning and controlling finances
   • Developing marketing strategies

   Hint

   Think of budgeting as a roadmap for finances.

4. 4.

   True or False: Contingency buffers are used for planned expenses.

   • True
   • False

   Hint

   Contingencies are meant to deal with surprises.

5. 5.

   A startup estimates its sales will be influenced by a competitor launching a similar product. How should it adjust its budget strategy to ensure financial stability?

   Hint

   Think about how competition affects sales.

6. 6.

   Evaluate how introducing new features to a health app impacts the initial budget in terms of development cost and expected return on investment.

   Hint

   Consider cost-benefit analysis.