Business Tip: Budgets
Sally Bridger
Chief Operations Officer, ICA
Budgets. For many, just the mention of this word can create feelings of overwhelming dread. Budgets are often perceived as multi page spreadsheets, streams of multi decimal numbers, binding rules, inflexible guidelines or penny pinching spending limitations. And, unfortunately, in some organisations this is actually the case.
I once worked as the Banquet Manager in a large luxurious hotel where each guest was greeted on arrival with a chilled bottle of French champagne. This was an extremely successful promotion and increased the sales and profile of the hotel considerably. However, behind the scenes, there was chaos. The champagne promotion had not been accounted for in the expense budget and it could not be updated to reflect any increased expenditure. Staff morale plummeted as Food and Beverage outlets competed against each other for their share of a diminishing supply of champagne glasses. This is the perfect example of where a badly managed budget can work against an organisation.
But, it doesn’t have to be like that. Let me give you another perspective. For me, the word Budget is something to be embraced. It represents a practical overview of future goals combined with resource management, and I believe the trick to an effective Budget is to keep it simple, realistic and flexible.
At International Coach Academy, the Budget process is always exciting. It is an opportunity to take time out, sit down, and reflect on the previous year and the year ahead. Initially, it isn’t about facts and figures. It’s about where do we want to be financially in 3 months, 6 months and 12 months time and what strategies do we have in place to make this happen. These strategies are then aligned with realistic financial targets and the outcome is a Budget - a snapshot of our future resource management, cash flow and goals.
Sure, our budget will definitely monitor spending but, more importantly, it provides our team with a fantastic opportunity to celebrate success and achievements. I find the prospect of meeting or exceeding a sales budget a powerful motivator and, when managed realistically, brings our team together as we strive for the one united goal.