4 Considerations at Least as Important as Not Going Over Budget
Houston Business Women Management Consultant
1. Give executives and leaders the final say on the budget. - Empower your operating executives or leaders to have the last word on budget development and compliance, not the CFO. Your staff must consider any significant spending decision by whether it advances the goals of the department or division and the company as a whole, not just how it compares to a plan. Budgets are static, but business changes on a daily basis. A document written months before can’t possibly predict all the pitfalls and opportunities that will arise.
2. Instill the company vision and goals. - Of course, decentralizing power over the budget is not enough. Employees have to know what you are trying to achieve before they can make good decisions. In the absence of other guiding principles (or a vision/mission they don’t understand), the budget will still guide every business decision. Ensure that employees fully grasp the company’s and their department’s overall strategic objectives as well as how their individual job contributes to achieving them.
3. Regularly measure the performance of every group. - You get what you measure. If the only consistent feedback your managers receive is whether or not they are meeting their budget, they will manage to it and not the business. Instead, work with your direct reports to create metrics that reflect performance specific to their areas and support company goals. Then, consistently measure them on these metrics to cultivate a culture of high performance.
4. Constantly push on the budget. - Ask these two questions of your managers regularly -- “What would you do if you had significantly more money to spend?” and “What would you do if you had significantly less money to spend?” These two questions force managers to consider the cost/benefit tradeoffs necessary to dynamically adapt to an ever-changing business climate.
Source: Entrepreneur
Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.
Houston Business Women Management Consultant.
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