If you work for a multi-faceted company, then you might be tasked with the responsibility of developing or maintaining the budget for your department.
Picture your company similarly to how you would envision a puzzle: the larger the business, the more pieces that need to fit with each other. Strategic financial planning for each level is vital to projecting the future profits of the company and eliminating any shortfalls.
So how do you produce the budget to allow straightforward visualization of each of these factors and maintain clarity so that everyone understands?
Gather Information to Produce Plans for the Budget
Begin the process of making the budget by working with the your team members. You must know the following crucial information: the budget for the past year, the actual records, causes of a surplus or shortfall, and your current year to date.
You might be required to ask for these details from more than one stakeholder. Make sure to be cautious so that you get facts instead of opinions. Everybody wants a piece of the pie, but you must determine how to best allocate the money.
Use historical data to gain an overall picture of how the resources were allocated and drill down into specific details. You must go over this during your presentation.
Set and Evaluate the Goals of the Department
When preparing your budget, ask specific questions: What does management want to see? What are the expectations of this department? Does this department offer services to other departments? What metrics are used to measure the performance of this department – are there productivity, administrative, or sales goals?
Understand and visualize the larger picture: think the same way your employer thinks. Plan effective strategies to optimize the impact of your department on other areas.
Have expectations individually or of the team, keeping in mind the cost of operations, equipment, timing and salaries.
Prepare the plans for more than one scenario and analyze the effectiveness of each to keep within the limits of the budget. Maintaining a finger on the pulse of the organization will assist you in justifying the use of more funds.
The Way to Budget
Now pull all of your info together and sit down to produce the actual budget. There are several tools for budgeting from you can choose to help you with prioritization of goals.
You might need to face difficult decisions as you work with the priorities of other people. Evaluate the different paths that you can take, talk with the heads of other departments, and figure out the best course of action.
With all of that in mind, it’s best to put together two or three alternate “what if” plans. Life is never simple. Showing alternate scenarios to your superiors prior to situations occurring will demonstrate that you have forethought and are a true leader.
Regularly Track Progress
Make it a plan to have periodic touch points to check that your team is meeting goals and make sure they are holding to the budget. Share this during the presentation and follow up. Don’t scramble for answers if things falter because of your inactivity.
Remember these wise words: An ounce of prevention is worth a pound of cure!
Be Ready to Adjust the Budget
Occasionally, even the best plans must be adjusted according to the situation. Continue to add to the alternate scenarios if situations arise to be ready prior to irreversible events occurring.
Reasons to Use the Right Tools when Making the Budget
Find out what’s the most logical for your presentation. Do the stakeholders respond better when presented with a spreadsheet of raw data or do they prefer a well-built visual presentation? There are lots of tools to help with compiling budgets, interpreting past records, and working with other departments/teams in your company.
Make sure to use clear, concise and visually appealing software with presentations.