What are the potential risks of not adhering to a predetermined budget?

A business manager can ensure that the budget for new inventory does not deplete faster than anticipated by closely monitoring the expenditure and adjusting strategies as needed. This could involve renegotiating supplier contracts, adjusting pricing, or shifting focus and funding towards marketing efforts to increase sales and balance the expenditure.

Not renegotiating supplier contracts in a small catering business can lead to increased costs, reduced profits, and potential financial instability. If the costs of supplies continue to exceed the budget, it may become difficult to maintain the current menu pricing without incurring losses. This could also lead to a decrease in the quality of service or products offered, which could negatively impact customer satisfaction and business reputation. In the worst-case scenario, it could lead to the business becoming financially unsustainable.

Some other potential signals that a business manager should look out for when managing finances could include sudden changes in revenue or profit margins, unexpected costs, discrepancies in financial statements, or significant changes in market trends. It's also important to monitor cash flow, as a negative cash flow could indicate a problem. Additionally, if there are any significant changes in the company's financial ratios, such as the debt-to-equity ratio or the current ratio, it could signal a need for further investigation.