3 Things You Forgot in Your Budget Planning

By Gary Oetker

So you've just finished putting together next year's budget and wonder if you've forgotten anything. First, congratulations for taking the time and effort to set financial goals for 2016. The 'plan' provides the road map to achieving these goals. Now that you have the budget, here are some considerations:

  1. Make an action plan. If the budget includes initiatives to grow department revenue or to improve your gross margin, remember these objectives are only dreams unless there's a supporting action plan and company-wide implementation. For example, if you want to grow residential replacement revenue — how many sales leads do you need and where are those leads going to come from? Is there an opportunity to improve your current retail sales process to get higher average tickets and higher closing rates? The devil is in the details.
  2. Create measurable goals. All goals must be measurable. A yearly budget does little good unless you can measure the progress toward achieving that goal month to month. Therefore you need to set revenue, gross margin, gross profit dollar, overhead dollar, and most importantly, net profit dollar monthly goals. But this can be frustrating if you have a bad month plan incorrectly. The secret is to adapt the budget throughout the year to achieve the “nut” at yearend, the net profit dollar goal. This is done through a forecasting process and then managing to forecast as taught in Operations Accountability training.
  3. Find out what motivates your people. The best-laid plans mean nothing unless your people are motivated to achieve the goals. This requires some soul searching. Are you satisfied with the company's customer service level? Do your people “wow” customers? Is the company culture what you want it to be? And for a hard question, are your leadership skills at the level they need to be? All of these this should be considered in your company plan.

Planning and running a business is much more than just working with numbers — its about crafting, executing, and measuring for a successful year ahead.

Guest blogger Gary Oetker is the Lennox Business Coach.

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