As all businesses close out the books on 2009, we now start the process of having to “stick” to the budgets we’ve set for ourselves in 2010. You know the drill: whether you own a business or work for one, there are budgets for everything. Sales, expenses, revenues, costs – everything. And, in this challenging economy, no matter who you are, you’ve probably felt the pain at one point or another.
It’s that point where budgets don’t get met and the boss gets upset. Travel gets cut, training goes away, and marketing budgets get slashed. Meanwhile, sales budgets increase, gross margin expectations soar, and everyone straps themselves in for a rollercoaster ride.
[image credit: wonderaround]
But as we begin the first quarter of 2010, let’s remind ourselves why we budget. Budgets are a management tool. They’re designed for leaders to properly allocate resources to accomplish necessary tasks. Budgets allow us to measure by using benchmarks and milestones. Why is it, then, that some organizations always fail to meet their budgets, over and over?
The answer: The best businesses in 2010 understand that the two pieces of an effective budget process include both 1) creating the budget, and, 2) executing the budget.
How many times have you witnessed a situation where the budget that was created included too many lofty goals that even the best performers could not attain? Conversely, how many times have you seen an organization fail to meet a defined budget simply because those who were charged with executing it neglected to manage, adjust, realign, and react effectively to the encounters they faced along the way?
Both are equally important. That’s the secret. And, in a way, that’s leadership.
- Number 1: Create a budget that is realistic, tied to objectives, and attainable given certain resources.
- Number 2: Execute that budget by resourcing it appropriately, checking it consistently, and adapting to contingencies quickly. The best companies will do both of these in 2010.
And remember, the term “budget” could be a “goal”, but a “goal” is not necessarily a “budget.”
Tags: 2010, budgeting, Cogster, steve bisbee
