Make 2017 the year to refocus and establish 2017/2018 budgets

Although budgeting may be seen by many business people as a daunting activity, 2016 should be the year to start seeing it as having the potential for being the CEO/Managers most valuable planning and management tool. It must be seen as an asset which adds substantial value to the future decision making process of the business.

In todays volatile market place, CEO’s all of the tools possible if they are to have sustainable success. In other words, the budgeting process and use of it should not be allowed to wallow in the bottom drawer of a desk.

Budgeting is absolutely a management responsibility and not and accountants responsibility and deserves the experience and talent a CEO has demonstrated to get their jobs in the first place. It should be a document that is not only measurable but one of constant reminder of where you are heading. There must be no surprises at the end of each month where adverse trends and the necessary fixes are reactionary.

Successful budgets will provide guidance for resource acquisition/allocation, and performances that contribute to a positive bottom line for current and future outcomes. CEO’s must not only live in the present but also encompass the future.

Budgets have been the only management tool which have give me reality to objectives, strategies, priorities, capital investment and business plans. I could not manage or accomplish financial returns for all key stakeholders without the availability of budgets. All of my strategic business plan goals have a true meaning when reflected through a budget.

Company wide and individuals accountabilities can be measured against agreed budget targets and poor achievements can damage chances of having any future initiatives approved.

The best friend and weapon a CEO/Manager can have for 2016 and beyond are good forecasts and plans which have endorsement at board level.

Although every business may be different and all CEO’s budgeting challenges may be different, the principles of managing the process are all the same.

It is up to each individual CEO to learn the art of budgeting for their particular business. Generalised forms of budgeting will not be beneficial.

Well thought out budgets will provide you with an ongoing guide to the true costs of products and processes against actual performance compared to budgets.

Business owners/board members/key stakeholders require budgets because they want to know how much the business will turnover, how much it will cost and the true nature of the costs.

They want this because the company represents an investment for which they are ultimately responsible. This needs to be translated into profit and cash flow, including the strategic plans which underpin achieving budget projections.

2016 could be the year you make a new commitment to formulating and using budgets as an ongoing weekly, monthly and annual performance tool.

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