In the simplest terms, a budget is an organised process for allocating financial, physical, and human resources in order to meet and exceed specific goals. We all know how important budgets are for monitoring and maintaining progress, assessing spending and predicting future growth. That being said, sometimes it is easy to lose sight of the basic purpose of a business budget, and thereby the best practices for achieving that purpose.
This week, we’re getting back to basics with some business budgeting best practices.
Align your budgeting process with your corporate strategy. Your budget does not exist in isolation from everything else that happens within your organization. In fact, it should be tied to everything that takes place. By aligning your budget with your corporate strategy, all those involved in the process gain a clearer understanding of its purpose and the goals you hope to achieve through it, as well as greater support for it overall.
Cater to those completing the budget. People don’t like budgeting, but if you make it less painful overall, you can improve the process and make it less strenuous, thereby improving the quality of the contribution. Consider reducing the complexity of those templates by creating them with the end-user in mind, and provide as much direction and support materials as is required.
Accountability is crucial. You want those participating in the budget to be accountable for their numbers. You can better achieve this by setting expectations and asking for employees’ feedback and input – and actually listening to what they have to say. Ultimately, the responsibility for the budget rests in the hands of all involved.
Use the data. Data, as it exists in that spreadsheet, is just that: data. Unless you apply some form of analysis and context, it is virtually useless. When planning your budgeting timelines, be sure to allocate time and resources for analysis, not just administration. Without it, your numbers are just numbers and provide very little by way of business intelligence.
Review and refine. If your budgeting process remains the same as it did when your company was in its infancy, chances are it is time to change things up. As your company grows, so too do the needs of the various departments, and thus the goals of your budget change. Continuous review and refinement of the budgeting process ensures you’re taking into consideration all moving parts.
Want to learn more about how TGO Consulting can help support you in your quest to improve your business budgeting process?
Get in touch today by calling (905) 470 6830 or visit www.tgo.ca.