Dear Aunty B,
I am sitting down this week to do my budgets for next year and, between you and me, feel like I am aiming blindfolded at a dartboard.
I got this year so wrong and feel like I am hanging on to my job by my fingernails, which are bitten to the quick.
And it is not so much only our business, which is in a growth industry. How do I predict what’s going to happen this year when I don’t think anyone else has the foggiest what’s happening?
What are you and everyone else basing their budgets on? Wishful thinking?
Dear Please Help,
First you learn from your mistakes. Ok, you got it wrong last year. Why? I suggest you probably didn’t build a robust enough picture of where you were going.
You need to make yourself a big checklist. Start here. You are in a growth industry right? So you work out what market share of that growth you think you can get.
You look at projections for the economy and other factors that are going to impact your business. You look at your leadership team and know you have the right people in place to lead.
You look at your new products coming on board and the potential for those to increase revenue. You are clear about your strategy and your competitive advantage and understand the marketplace and what your competitors will be doing this year.
You then look at your risks. For example, do you have the capabilities to deliver excellent client service? Is there anything that might hold you back like outdated technology? Where might lie the cost blow outs? You also consult with your team leaders. What do they see ahead? Where are the opportunities and the traps?
The next question to ask yourself is where do you want to be? Is there a gap between where you think you can finish next financial year and where you want to finish? If there is, then work out how you are going to get there.
Understand this is really an ongoing process that takes all year to do: it is actually a crucial role of the CEO to be on top of the business, not in it running the day to day. By the time you get to the budget you should be at the end of a process not the beginning of one.
Your Aunty B