8 Tips For Stress Free Budgets
For many people it's budget time again and I don't know about you but for me, doing the annual department budget was never my favourite task. My first budget was terrible, it was largely just given to me and not knowing much better I said sure I can do a 5% cut in costs! Having been through the loop a few times now I've learned the odd thing or two and I thought I'd share them.
Don'ts
- Accept a budget that is handed to you from above or the finance team for rubber stamping. You need to understand what is making up the numbers in each area, and the phasing, i.e. when you'll expect spend it, having $7000 for training may be good but if it's in the last qtr & the courses are the 1st qtr it doesn't help cash flow.
- Do the budget in isolation! Make sure you talk with other department heads about what they have included or not, the last thing you need is an assumption by you or them that it's in each other's budget
- Put off doing it till the last minute! Ideally you should be tracking your budget this year & using that to redesign your budget for next year as you go along, that way when it comes time to talk numbers you are 90% there.
- Never, ever, ever.. delete or add a line to a budget spreadsheet, if there is one thing that is sure to get you on the Finance boss's wrong side that it.. trust me, I know, I did it and she still reminds me about it.. even after 5 years!
Do
- Involve your team – this lets them understand how much it costs to run the department, how the budget aligns with priorities and so on. Mostly helps in developing your team and as part of this they feel more ownership of the numbers so can explain & support decisions more.
- Know what is included in each bucket of money & push back when you don't think something is right. Over the next year you will have to explain any variation to plan and using the "I never agreed with it at the start" doesn't cut it, speak up or shut up.
- Think about how the business plans/ hiring people / strategy / capital spending / training - these will impact your spending and take your best guess, yes, I said guess since that's what this is. Your budget is going to be wrong the minute you submit it, but you can cope with a little wrong... but majorly wrong, possibly not so much.
- Get indicative quotations for things & review any contracts that you have in place that may be due for renewal – allow for an inflationary change to let you get some realistic numbers into the budget that you can defend when asked about. If you can show your numbers are based on facts you stand a better chance of it carrying through the process as requested rather than having it stripped back.
Get a Copy of the Don't Vs Do's of Busgets
We're happy to answer any questions that you have.
Budgeting doesn't have to be hard or a battle of the departments, it can be easy and stress free if you get organised and follow these tips!
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