3 Tips To Make Budget Season Go Smoother

Use these three tips to keep the budget process on track and, hopefully, make it less painful.

Elliot Markowitz

September 3, 2014

3 Min Read
3 Tips To Make Budget Season Go Smoother

It’s that time of year again: Kids are back at school and CFOs and business managers are scrambling to create their 2015 budgets. Every year it seems the budget process in most companies gets hijacked regardless of schedules, plans, meetings and good intentions to stay on track.

Three rounds turns into five rounds. October deadlines turn into December mad dashes. The result is a budget and sales-growth expectation that neither the stakeholders nor the CFO are usually completely comfortable with. As a result, budgets are many times revisited in the first quarter and metrics such as 3/9s (3 month actuals, 9 month expectations) are made up. Then by mid-summer, everyone realizes they are midway through the third quarter and the entire process has to start all over again.

Here are three tips that will make your budget process a little smoother and a little less painful. They won’t solve all your woes, but they are good parameters.

  1. Start Early: Organizations should not wait until the fourth quarter (October-December) to begin the process of putting together sales growth projections and expenses. In fact, even starting in September is too late, because after Labor Day you really want your sales staff focusing on selling, not sitting behind spreadsheets. By the time September rolls around, budget discussions, expectations, the process and the scheduled deadlines should have been discussed and put in place. The fourth quarter should be the selling period, not the planning period.

  2. Make Round 1 Real: For many business managers, when budget season come along, they use Round 1 as a wish list or a throwaway. They filled out their columns and rows with growth attached but really haven’t given it much thought. It’s looked at much like a homework assignment that isn’t checked by the teacher. That’s a horrific way to start the process. Round 1 needs to mean something. It should be evaluated closely and be the business managers best-educated formula for growing his/her business. Otherwise, it’s just a waste of time because they feel the CFO is only going to come back to them asking for higher sales rates and lower costs. This mindset needs to change. Too many rounds and too many versions add up to too much time wasted. Make business managers accountable for Round 1. Let them know it will be scrutinized and could possibly be the round that passes if put together properly. Do that and you will see how realistic the first round of budgets come in.

  3. Set Reasonable Goals: For many business managers the entire budget process, whether it takes one round or 10, is a waste of time because the CFO already has set expectations in his or her head. As a result, the growth numbers are rarely met and the profit margins fall. CFOs need to work closely with their business managers to set reasonable budgets evaluating the overall economic conditions, current specific market and the strengths and weaknesses of their sales organization. If the CFO keeps pushing for a certain number without taking into consideration the concerns of the business managers or sales staff, then the budget really doesn’t mean all that much. On the flip side, sales professionals do need goals to strive for that aligns with the company’s growth expectations, within reason.

No one particularly enjoys the budget process. It’s time-consuming and can be frustrating. However, if you follow these three simple tips, hopefully your process will go a bit smoother. There always will be pain points along the way, but hopefully not as much.

About the Author(s)

Elliot Markowitz

Elliot Markowitz is a veteran in channel publishing. He served as an editor at CRN for 11 years, was editorial director of webcasts and events at Ziff Davis, and also built the webcast group as editorial director at Nielsen Business Media. He's served in senior leadership roles across several channel brands.

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