Leading Your IT Solutions Provider Business To Stay On Budget
By Andre Gilmore, Senior Consultant, HTG Peer Groups
The benefits of managing a business according to a sales plan and budget are proven and well documented. Companies that submit to this one basic discipline tend to execute better, improve speed in decision making and make better course corrections, all while adding more dollars to the bottom line. However, knowing and believing the benefits do not necessarily translate into flawless execution. Here are a few practical tips to assist you in leading yourself to stay on budget.
- Invest in the financial planning process and stick with it. Take the time to adequately develop your annual plan. A plan that you have invested some time and energy developing has a much better chance of being executed. Do not merely go with last year’s expense totals, but rather put as much intelligence into each line item as you can. A typical planning rhythm starts preliminary budget preparation six months before the start of your fiscal year.
- Conduct monthly budget focused meetings and provide timely financial reporting. Your annual budget is a plan. Nothing more nothing less. Building a good plan is a matter of compiling the best information you have at the time and documenting those facts and assumptions to model your financial performance. Regular financial reporting on your progress against your plan is invaluable in keeping your budget relevant all year long. Successful execution of the plan should be supported via regular monthly meetings specifically focused on understanding variances between actual financials and the plan. This creates organizational discipline and top of mind awareness and increases the likelihood of successful execution to the budget.
- Consult your plan before pursuing unplanned opportunity. It is important to understand that opportunity does not always knock in accordance with your annual planning cycle. Even the most mature organizations possessing long term strategic plans linked to short term operational action plans will have to make course corrections, or respond to unforeseen opportunities or challenges. Such is the nature of business. However, even when pursuing a new opportunity, it is helpful to model both the expected revenue and expense and incorporate it into your current plan. Being disciplined about managing the unexpected and limiting deviations from your plan can help you stay on track.
- Refresh every six months to keep your budget relevant. It is now past the midpoint of the year, and it’s time to see how your assumptions are shaping up. Are sales softer than expected? Are your expenses trending better than expected? What does the immediate future hold? Refreshing your assumptions mid-year is a viable strategy the keeps you from ditching your plan because it is no longer relevant.
These simple tips, if implemented, will go a long way toward keeping you and your team on track and operating according to a budget which significantly increases your likelihood of achieving consistent profitability.
In HTG we discuss topics like budgets and process improvement. To learn more visit HTG Peer Groups.com.
Andre Gilmore is a Senior Consultant with HTG Peer Groups. Prior to joining the HTG Peer Groups staff, he spent almost 20 years in various roles in small business ownership, operations management and business process improvement. He is passionate about analyzing company financial data to plan for the future and helping companies improve their level of execution by implementing sound business processes. You can reach him at agilmore@htgpeergroups.com or find him on LinkedIn.
This article originally appeared at http://htgpeergroups.com/blog/entry/leading-yourself-to-stay-on-budget.html.