Four Steps to Creating a First Class Budget
When creating your budget, don’t start with last year’s budget. Start from scratch, this allows you to rethink your entire budget.
Furthermore, don’t just look at revenues and expenses. Look at the bigger picture your Balance Sheet and your Cash Flow position. In the process of creating your budgets, be sure to look closely at your program expenses versus your management and general expenses.
If you have multiple departments or business units, be sure to involve all your team leaders in the budgeting process.
This streamlines your budgeting process and gives you more control over the end result by allowing you to define and enforce budgeting rules, manage and track budget performance and fast track your approval process through a well define workflow process.
Make sure that your overhead expenses are allocated correctly.
For example, if your Director spends up to 50% of his or her time directly on programs, allocate his or her time accordingly. Similarly, if you have five departments and you are trying to allocate expenses across departments, don’t just allocate expenses by dividing by five. Allocate based on hours worked on specific projects, use timesheets if necessary.
It is critical that you align your budgeting process with your business plan. This will allow you to decide on key strategies and actions more quickly.
Ensure you have at a minimum an 18 month rolling budget, this will allow you to monitor your performance more closely and modify your expectations taking into account continual market changes.
About the Author – Taso Tounis BAcct – Budget Strategist
Principal Budget Strategist Taso Tounis has over 20 years experience in preparing, managing and monitoring budgets and forecasts for a broad range of companies, including Johnson & Johnson Company, Affinity Health & Minter Ellison
“At Budget One, we specialise in helping start-ups, SME owners and leaders or senior managers of non-for-profit organisations, better manage the business through effective planning and reliable budgets. Our streamlined and stress-free budgeting solutions enable our clients to make sound operational and strategic decisions faster and with confidence.”
To discuss your budgeting autonomy needs or book a free no obligation appointment.
Call 1300 1 Budget
Email: [email protected]