1. formalizes planning process by providing "best estamite" of the coming year

2. provides projected revenue and expense estimate needed to prepare a proforma income statement

3. provides an opportunity to evaluate borrowing and repayment plans

4. financial control tool

5. allows coordination among business plans

6. directs attention to the management of cash resources

1. plan cropping program

2. summerize major crop costs

3. plan livestock purchases and sales

4. budget crop usage and feed requirements

5. plan capital expenditures and repairs

6. project term loan payments

7. plan family living budget

- when cash available is less than cash required, short term borrowing may be necessary

1. revolving line of credit

2. non revolving line of credit

3. short term notes