Ready, Set, your Budget: Maintaining Speed

Alright, you’re almost finished! The final phase of a sprint is maintaining speed (well, excluding the finish, of course). At this point, you’ve set your budget for next year. You’ve reviewed it. You’ve put plans in place to meet your budget. You’ve set stretch goals. You’re ready for 2015! But, there’s one more thing to do – maintain!

Setting a budget is not just a year-end excercise to be done then set aside and hope you hit it. You don’t just get your budget out next November and see how close you came. Before you are ready finalize your 2015 budget process, get your 2015 calendar out. Set a monthly meeting on your calendar for financial performance and budget review. Depending on your company structure, this may just be a block of time on your calendar for you to run your reports and review where you’re at. Or, you may have a management team to get involved in the process. If you’ve got an accountability partner, set the meeting with them. The point is, get the meeting on the calendar. Don’t let it get to be June of next year before you think to look at your budget and performance.

During your budget and performance review, you’re going to be doing the following:

  • Review your year-to-date Profit & Loss statement
    • Review for performance
    • Review for reasonableness – make sure you understand what is in each account
  • Review your balance sheet as of the most-recent month closed
    • Review for reasonableness – do you know what each balance means?
  • Review your actuals to your budget
    • Are sales keeping up with budget?
    • Are you overspending in certain areas?
    • Do you need to make adjustments to your budget based on some changes in your performance
      • For example – if your sales increase triple what you budgeted in the first 3 months of the year, some of your expense line items may need to be updated as well.
  • Make updates to your budget as deemed necessary. This doesn’t mean, just make your budget equal your actuals, but if you see that you are going to start spending more on advertising because you’re seeing results with a test program you had included in your original budget, then it’s ok to increase the line items that will be affected. Just make a conscious decision to make updates and make sure your revenue, cost of goods sold, and expenses are still in line based on the updates.

Now – do you have 12 meetings set on your calendar for 2015?

 

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