Page 168 - SKU-000506274_TEXT.indd

– Could I really achieve my objectives with that additional
investment if I was creative enough?

– What might I do differently to achieve them without extra
costs?

n If I really need extra investment, can the investment be found?
– Is this worth fighting for?

The advantages of budgets

n Properly done the budgeting process can increase motivation and
commitment.

n The objectives are clearly defined at every level.
n Key actions are frequently highlighted.
n Responsibilities and yardsticks are clarified.
n Combined, they provide an overview of the companies activities.
n Decisions concerning the allocation of resources are easier and

more logical.
n Inter-departmental conflict can be reduced or eliminated by

intelligent budgeting.
n Early warning of problems is facilitated.

Using the budget

To use a budget successfully:
n Build a robust strategic plan.
n Identify corporate objectives.
n Break down to departmental and divisional objectives.
n Develop tactical plans to achieve the strategy.
n Prepare budgets that reflect the plans.
n Measure actuals.
n Identify variances.
n Take corrective action.
n Create feedback for next planning session.
n Build a robust strategic plan.

Try as I might I have never been able to convince myself that finance is
fun. It is, however, essential that businesspeople recognize that business is
about money. Profit is sooner or later essential and cash flow makes the dif-
ference between survival and failure. Decisions about money should not be
taken in isolation. Conversely, however, few decisions can be taken without

Knowing the numbers 137