Budgeting is a painful process, but it is not just something that takes up your time in October and November. Your budget is a planning tool that should be used throughout the year to update where you are, and where you’re going. Remember, you didn’t write the budget by yourself, and you aren’t the only person responsible for managing it. Budgeting isn’t a one-person job, and administering it isn’t solely your responsibility either. Now, it’s mid-year. When was the last time you looked at your budget – with your team?
Just as you manage your business through others, you need to involve others in managing your company’s budget. Remember, that you can’t do everything. Just as everything that happens in the company flows down to the financial statements, the work that everyone does end up impacting on where the financials are going. So you want to involve the people that will drive the results in your financial reports. So, how do you get them on board?
Create a team – Select a team of employees to be responsible for the budget. You have ultimate responsibility for the overall results, but sharing those responsibilities helps assure that the project is completed properly and involves more of the company. Just as they are involved in creating the operating results for the company, they should be involved in creating the budget as well.
Lay out your vision – What are the things that you’re hoping to accomplish this year, and how is the budget going to help the company accomplish them? Describe your overall goals to your team and get them to agree to help you accomplish them.
Assign the task – Each team member needs to have individual responsibility. Everything purchased contributes to the budget, whether that be the purchasing of cleaning supplies, raw materials, snacks and meals, subscriptions, association memberships. And it’s no different with assuring production efficiency, developing sales or collecting AR receipts. Each member of your team should have primary responsibility for part of the budget and should identify people working with them that will also have budget-related responsibilities.
Follow up – Don’t wait till the end of the year. You should meet with the team regularly to understand their methodology, how they are approaching their budgetary tasks, and what their interim results are. The additional benefit is that this also confirms your commitment to the task and your interest in how they’re doing. Commitment comes from the top. Your commitment will rub off on them. If you show a lack of interest, why should they spend the time working on it?
Compliment, Advise – If members of your team are doing well, compliment them. Nothing works like warm fuzzies to help employees feel appreciated. If they’re not doing well, talk about their task, its importance, and recommend changes in the way they’re working to help them succeed. During those conversations, reinforce the importance of their part in the process.
Reward – When the year is over, reward them for a job well done. Creating a budget isn’t hard. The difficult task is managing it. Whether you meet the budget or not at the end of the year, your team will probably manage the budget next year. This year’s activity is an effective learning process. By managing the process, you got a solid team-building experience. Reward your team members for a job well done. That reward will pay you back big time.
When I talk to business owners, they often groan about budgeting. They know that they should do it, but it is often a once a year process. If it becomes an ever-adjusting yardstick of what your ongoing business results, then it is a vibrant part of how your company operates. Charts on the wall comparing actual results to the budget will help with that staff commitment. Just remember that if you delegate your responsibilities, that includes budgeting, and explaining interim results. By involving your team, you gain commitment and engagement. Studies show that deeper engagement results in higher profitability. Who doesn’t want that?