By Jim Hartigan
August 2010
I can remember from my earliest
childhood being aware of different “seasons.”
Beyond fall, winter, spring and summer (the favorite of every child),
there were many others. The new
television season - in black and white and on the three major networks,
but
that dates me - and baseball season (an Ohioan by birth a Cincinnati
Reds fan
by choice). In high school there was
marching band season (“This Friday night the marching band performance
will
again feature a pre and post football competition against a rival
school”)
followed by wrestling season, followed by girl season. As I grew
up, I noticed the retailers had the
Christmas shopping season, which has moved its start from Thanksgiving
to just
before Halloween. As a parent, I became
aware of the “Back to School” season with new clothes, now uniforms,
and school
supplies and text books. In the business
world, the “Back to School” season signals the start to another
season…BUDGET
SEASON.
With the 2011 Budget season looming, we’re
going to take a look at what I like to think of as a “Successful
Budgeting
Checklist” to help make this a winning season for you and your
team. But before we get too far, let’s have a
little budget “pre-season” and briefly review why you should even be
worrying
about budgets in the first place. Here
are the top 3 benefits that a good budget will provide your business.
- Plan your work and work your plan – I know, cliché,
but
work with me here. A good budget is a
working document. It is a plan for
expenditures, for revenues, and a map for marshalling the resources to
complete
the top strategic initiatives for your business. Without a plan,
you leave it all to chance.
- If you can’t count it – it doesn’t count. Another
cliché? Hardly.
What you measure you can manage and managing is the logical downstream
action that you embark upon with your budgets.
Know your metrics – or “cost per” ratios. Work from solid
benchmarks in productivity
and reliable forecasts. In the end, this
really is an accounting exercise.
- Always have a plan B – That’s not a cliché, so much
as a
statement my son made when he was six years old and wanted potato chips
but had
to settled for pretzels. If you have a
well thought out plan A, when things go awry (and things always go
awry), you
have a better shot at still succeeding when you have a plan B.
Having a plan B is a whole lot easier when
you’ve fully vetted plan A – your final approved budget.
Okay, budgets are important—we’ve
established that. Now, to better help
you transition into budget season, here’s a checklist for your
reference as you
begin work on your own budgets.
- Take Inventory –
Start
with the physical inventory of equipment and supplies. Team
member productivity is dramatically
improved when they have the proper tools and supplies to do their
job. Reduce the chances of having to explain “emergency
purchases” next year and get a bump in team member morale by planning
the
repair and/or replacement of major equipment and supply stores.
This step goes beyond the physical stuff
though. Take inventory of your
strategy. Your organization’s Mission, Vision, and
Values. Embark upon this season with a
strong foundation. Tally up your
organization’s training and development assets and assess their
relevance now
and for the upcoming year. Do you
anticipate needing an update in this department?
- Start with the end in mind
– How will things be different at the end of 2011? What will
success look like in December
2011? How will you know? What measures will be
changed? What initiatives will be completed? So.
Many. Questions. But careful consideration of each is
recommended for sound budgeting. And to
further muddle our discussion about the future; let’s talk just a
second about
the past. When you’re thinking about the
answers to questions such as “How will things be different at the end
of 2011,”
don’t lose sight of what you learned in 2008 and 2009! Even if
your organization made it through the
toughest parts of the economic downturn without so much as a scratch,
hopefully
it at least got you thinking about some “what ifs.” Budget season
is a good time to tie a dollar
amount to those “what ifs” and work them in to your organization’s
budget.
- Align Activities –
Once
you’ve determined how you want the future to look – go back to your
foundation
(Vision, Mission,
Values, Strategy) and check for alignment.
Have you stayed true to your foundation?
Do your key initiatives and activities fit with your strategy?
- Now do the numbers
– At the end of the day, it is about the business. Do the
numbers. With your end in mind, what do the numbers
tell you? How are your productivity
metrics compared to prior years? What is
going to be different financially and why?
What is the ROI of your major purchases and key initiatives? Will
you see improved customer satisfaction
and loyalty? Reduced costs? Increased Revenues?
- Engage the team –
The
best budgets are built from the ground up on a strong foundation with
the hands
of everyone on the team. A friend and
former colleague likes to say “People support what they build” and he
is spot
on.
Someone once said, “A budget is
just a method of worrying before you spend money, as well as
afterward.” While there is undoubtedly some truth to in
that statement (that is, budgets are a source of anxiety for many a
businessperson), budget season is when your organization lays the
framework for
its financial success in the future. So,
get in the budget season spirit! Maybe
serenade your neighbors with some budget carols or send an old friend a
budget
card—whatever you have to do to make this budget season your best yet!
Until next time – take care of your customers, take care of each other,
and take care of yourself!
About the Author:
Jim Hartigan, Chief Business
Development Officer and Partner joined OrgWide Services, a
Training/e-Learning,
Communications, Surveys and Consulting firm in April 2010 after nearly
30 years
experience in the hospitality industry, including the last 18 as a
senior
executive with Hilton Worldwide.
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