Tips for Managing a Budget

Helpful tips for first-time budget owners.

With great power comes great responsibility. Even with a great finance team to support you, managing your numbers can be a real pain. Here are a few things you can do to succeed:

Aim small, miss small.

The most important step to hitting your budget number is coming up with detailed plan. Be precise and limit your assumptions. Take time to work with your team and anticipate everyone's needs. Bringing your team along will also create shared accountability.

It's easy to misjudge resourcing needs, misprice purchases, or overestimate productivity needed to achieve your objectives. Reach out to peers and learn how they think about budget allocation. For some departments like Customer Support this may be a quantitative exercise depending on Sales. For others, like engineering, it may be staffing ratios and estimating tools and service needs.

Don't use fuzzy math and avoid making assumptions about productivity or capacity improvements without testing. You put your plan at risk and may end up with too much stress on your team.

Track everything.

Your scorecard will come every month in the form of a Budget vs. Actual (BvA) analysis. The problem is your scorecard typically comes in 1-2 weeks after the month is finished meaning you're already half-way through your next budget period. The delay is due to Finance teams need to close and review your businesses financial records. To stay ahead track key purchases with your team in a shared spreadsheet. Don't track data and information in your email. It's a mess to find things and key information isn't available to you. For many teams, you'll want to track spend closely for key initiatives regardless.

For purchasing where there's an ongoing commitment, like a consulting project or software subscription. Track key milestones and make sure your team sets reminders to audit the vendor's performance or cancel before key billing or contract renewal milestones.

Run the process, don’t let the process run you.

Like most things in life, success comes with discipline. This is especially true for financial performance, personal or in business. Treat Finance Management like a key business process. Put together a system for tracking information, collaboration, and updates. Once you have a plan in place, make sure you have a reliable process to execute against your plan. Set expectations with your team on how and when hiring requests, purchase requests, and project requests are handled.

A good finance team can be magical in setting up good financial operations, but that's not always the case. In any event, make sure your business partners work on the most important financial decisions and they provide you with timely analysis on your key questions.

Related Resources

Get Finance Ace.

The best free tools and information for executives, operators, and anyone looking to excel in corporate finance.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.