Product development projects are notorious for going over budget. Often way over budget. This is particularly true in small companies. The opportunity to develop products is generally less frequent in a small business.
Sometimes years can go by before another new product is developed and the team that developed that last product may no longer be with the company. Small businesses just do not get the experience necessary to be good at a task that is hard, even for those who do it every day.
Worse, small companies are more sensitive to product development budget. They do not have the ability to sell a large quantity of units to offset unbudgeted tasks. If the budget is wrong, the project may never produce a positive return on investment and could be shut down after wasting significant funds.
Understanding the dynamics that can cause a product development budget to go awry is key to improving the budgeting process.