Before preparing a budget, what is the first crucial step?

Identifying the unit's mission is the first crucial step before preparing a budget because the mission defines the primary objectives and goals of the unit. Understanding the mission ensures that the budget aligns with the strategic direction and core functions of the organization. By clarifying the mission, individuals can prioritize spending, allocate resources effectively, and ensure that the budget supports initiatives that contribute to achieving the unit's goals.

Once the mission is established, other aspects such as estimating operational costs, reviewing previous budgets, and setting performance metrics can be approached with a clear understanding of what the unit aims to accomplish. This alignment is essential because it ensures that all financial planning and resource allocation directly support the overarching mission, leading to more effective and efficient operations.