Time to Make the Donuts – Changing Your Perspective on Creating a Budget
by Hal Levenson on Oct 6, 2020 12:26 PM
At the beginning of every 4th quarter, as I think about the upcoming year’s budget, I’m reminded of the old Dunkin Donuts commercial where the deflated guy woefully says, “Time to make the Donuts”. This is how some business owners feel about creating a budget.
Why is creating a budget viewed as such a drag? There are many possibilities. It could be looked upon as a necessary chore; something you are supposed to do. I know as a Visionary, being obliged into any type of process whether it be monthly or annually makes me cringe. It also forces an owner to face the state of his/her business which can be uncomfortable, and for some, may be even more difficult this year. Finally, some business owners just don’t know where to begin. I’ve seen instances where companies with relatively large revenues don’t have a budget for that very reason.
I often tell my clients that budgets should be viewed as an information tool and guidepost, not a nuisance. Budgets reveal the story of your business (both factual like fixed expenses and fictional like projected revenue) and abiding by it can also help keep the company focused on its goals.
Points to consider about creating a budget:
Get others involved in creating a budget. In addition to your CFO, Controller or Accounting Manager, other employees should play a part. This will not only help educate them but also provide a sense of ownership over the areas where they directly affect revenue and/or expenses.
Review your budget vs. actuals monthly. You can see patterns emerge much quicker by reviewing the data more often. This allows you to react or anticipate issues/opportunities in real time.
Be willing to learn from the numbers. Asking questions such as, “Why are the numbers in line? Why are they off base?” enables you to verify or invalidate your assumptions. The more you know, the better you can run your business.
If you are starting to consider using a budget for your company or have used one in the past and need guidance, don’t hesitate to contact us. We can add meaning to your projections, help you manage by the numbers and create financial wellbeing.
About Hal Levenson
Hal Levenson is the Founder and Chief Visionary Officer at Trilogy Partners. Trilogy Partners is an advisory & implementation firm whose mission is to help companies grow and transform. We accomplish this by focusing on 3 critical business areas: Financial, Strategy & People.