Whether as an individual or company, taking financial control is an essential element to success. Many of my manufacturing, supply chain and distribution clients dread budgeting time when they should be looking at it as an opportunity. This is always an appropriate topic but especially when looking forward to the next quarter:
1. Plan - as obvious as it sounds, think in advance about your projected income and expenses. I’m constantly surprised how many businesses and households do not plan and then are surprised at the results.
2. Think big picture – forget the details and think big picture. Is there a significant difference from last year? Why? What is the trend? Do the numbers make sense when you step back from adding and subtracting? Again, I cannot begin to count the times the numbers have been wildly off target and missed, yet they “added up”.
3. Track progress – don’t wait until it’s too late; start now. After all, why bother creating a budget if you do not use it? In my experience, those companies and individuals that create value through the budgeting process, track progress and adjust accordingly.
4. Feedback – this is as simple as celebrating success and evaluating areas for improvement.
5. Do not marry yourself to a budget for the sake of the budget – one of the most common mistakes is being too rigid about the budget. If the market changes, if a new priority or opportunity arises, if it looks like you’ll make your budget too soon; change it. Think smart flexibility.
6. Consider your presentation – one of the largest hurdles of budgeting is when you achieve it. Will you continue to be motivated to achieve 30% more? What can you do to plan yet create accountability combined with flexibility for what makes sense on a daily, weekly, and monthly basis?