Getting to Better Budgeting: 5 ways to up your budgeting game

Published by the Canadian Golf Superintendents Association in GreenMaster (Fall, 2017).

The very thought of budgeting can conjure up feelings of an abundance of effort for little in the way of outcomes.  Ask people how successful they are when it comes to meeting (or beating) their budget and many will say “not even close”.  Suggest that a budget should be prepared before getting started with a new fiscal year or venture and the response might be “we can’t predict the future, so why bother?”.  And when all else fails, there’s always the familiar excuse of “nobody looks at those things anyway”.  These viewpoints are more common than one would expect, but actually, they are far from accurate.  Why is this the case?

The simple reason is that budgeting is a learned skill, and practice makes it better.  When considered in this context, here is what the comments above actually mean:

What They Said Translation
“Not even close”

The budget wasn’t reasonable.

We didn’t pay enough attention to the budget once it was developed.

“We can’t predict the future, so why bother?” We don’t know enough about our organization to prepare a meaningful budget.
“Nobody looks at those things anyway” We don’t understand budgets.

Experienced advisors know these misconceptions all too well, and the only way to overcome the challenges of budgeting and improve outcomes is to take action.  This means implementing a sound budgeting process, upon which an organization can build over time.  Here’s how:

  • Assign the right resources: Those who are responsible for conducting the actual budget work should have relevant experience, including a professional accounting designation.  Since budgeting is a specialized area, in the event that an organization’s staff members have not previously conducted budget work, the necessary training and education should be provided in advance.  Advisors can also be helpful in this regard.
  • Have a game plan: Developing a budget doesn’t just happen, and it’s important to have an action plan that identifies all critical activities, timing, and responsibilities.  The budget should have a standard format, including an Income Statement, Balance Sheet, Cashflow Statement, as well as supporting schedules and assumptions that provide the rationale for how amounts were developed.
  • Engage the senior team in the process: A budget shouldn’t be developed in isolation, such as by an organization’s leader or the “Accounting Department”.  This approach can result in those on the senior team taking the view that the budget “doesn’t belong to us”.  In order to avoid this scenario, all members of the senior team should be involved, by way of developing the budget assumptions that pertain to their area, as well as review of drafts and finalization.  This approach gets everyone on-side, making the budget that of the organization and its team.
  • Draft, review, and revise: Budgets don’t typically come together on the first try, so it’s important to prepare a draft version, review and critique it as a team, and revise where required.  This process might take a few drafts, but it is rich in learning for everyone involved.
  • Implement and monitor over time: A budget only means something if it is formally implemented and monitored over the full period to which it pertains.  Common mistakes include developing a budget and either not formally implementing it (so people think it doesn’t matter) or failing to compare actual performance to budget on an ongoing basis.  Either scenario leads to poor outcomes.

The good news is that the work is in getting started and these efforts can be leveraged over time, through re-use and enhancement of what has already been put into place.  Starting now creates the opportunity to get on the path to making the process easier sooner.  What’s more, the good performance that can be generated will add some distance to your game.

EVENTS: Winnipeg Franchise Expo

Join me at the Winnipeg Franchise Expo on Saturday, March 25th for Don’t Forget the Numbers: What Non-Financial Leaders Need to Know

Many companies are led by people with strong technical or service backgrounds and limited finance knowledge; this can diminish the results that leaders work so hard to generate, such as financing, growth, and profitability.  There are many financial literacy resources available on a personal level; however, the focus on business is really just emerging.  Unlike traditional accounting education that is too complex or difficult to implement, this seminar brings a plain language approach to accounting and financial management.  Focusing on the key areas that leaders need to understand, topics include how accounting “works”, financial statements, improving results, budgeting, forecasting, cash flow, and accounting roles and qualifications.  Session participants will learn:

  • How the accounting function “works”, in simple terms, as well as practical approaches that can be used to improve financial performance
  • Tips for identifying the right team members, by understanding the various roles and qualifications in an accounting department
  • Tips for avoiding the costly mistakes that leaders make, when it comes to seeking financing and capital, due to a lack of financial knowledge.

Details and registration are located here

EVENTS: The Canadian Golf Course Management Conference

Join me at The Canadian Golf Course Management Conference February 27th to March 3rd, 2017 in Victoria, BC, hosted by the Canadian Golf Superintendents Association.  I am one of the educational speakers and will be presenting Green is the New Black: Better Budgeting and Financial Outcomes

Many organizations have people with strong technical or service backgrounds, but limited finance knowledge.  This can present challenges, when finance related tasks that are part of managing any organization, such as budgeting, monitoring, and improving financial performance, are undertaken.  Leaders and their teams have an opportunity to increase their financial knowledge to make their work easier and improve results, for the benefit of all involved.

This session will provide a plain language understanding of how the budgeting, forecasting, and financial analysis processes “work”, which can then be utilized to improve performance.  Having this skillset can set individuals apart from their peer group, in terms of both ability and career advancement.

Details about the conference and how to register are located here  See you at The Canadian!

Accounting for Business Growth and Transition Course Now Available!

I’m pleased to announce that my new course, Accounting for Business Growth and Transition, is now available!

Growing companies are dynamic places and there are a number of specialized issues that could arise during the lifecycle of a business. These include the complexities related to expanded operations, entering new markets, and undertaking business transactions.  It’s critical to understand these areas proactively, as well as how to add value to the company during the process.

Too many companies barely manage to do the minimum; resulting in the accounting function being little more than a place where transactions are recorded and reports are filed away.  The opportunity to learn how to develop and manage an accounting function that not only helps to improve operations on a day-to-day basis, but also provides a valuable support in times of transition is a powerful one!

This course addresses a range of areas that might be encountered during the evolution and growth of a company. Topics include organizational structures, consolidated financial statements, foreign exchange, due diligence requirements, and understanding approaches for structuring a business transaction.  Those who work in the accounting function will gain an understanding of how to take a leadership role in creating a value centered department that can play a key role in not only a company’s current operations, but also in whatever the future might hold.  Register today!