After more than four decades of personal involvement, in almost everything related to leadership, from identifying and qualifying, to training, developing and mentoring thousands of actual and/or potential leaders, I have come to the firm conclusion of: I believe that there is a need for leaders to take budgets and the budget process more seriously. Too many, too few, of these individuals don’t know, or don’t care enough, why this is important and how to proceed, effectively, using a budget, in a more meaningful way, and actually knowing how, to , really, evaluate the budgetary expenses of a group. With that in mind, this article will attempt to briefly consider, examine, review, and discuss 6 ways that great leaders proceed in their quest to effectively, deeply assess budget expenditures, etc.
1. Review the proposed budget, versus actual expenses, for a minimum of 3 years: Too often those creating this document look back at previous budgets rather than what the actual expenses may have been! Knowing what was spent and how helps the process, but unless/until the emphasis becomes whether it was spent in the most productive, profitable way, and whether there may be better options in the future, the best interests of a group are not being served/satisfied!
2. Differentiate between fixed/contracted expenses and others: When trying to create a valuable document, it is necessary to separate/differentiate between costs, which can be fixed/contracted, and others! Some of the former include: rentals/leases; contracted wages; certain utilities; etc While some of these may have some leeway, most of the focus/emphasis should be placed on the other types.
3. Consider options/alternatives: avoid the, My way or the highway, attitude! Always look at each expense and ask if there are other viable options and alternatives that might serve the group better and more effectively!
4. Think outside the box: It is important to proceed, with an open mind and to think outside the box! Is there a way that your organization might be able to perform better, effectively, prioritizing, differently, etc.?
5. Relevant and sustainable ramifications: Every action, or failure, to take action, when necessary and indicated/necessary, has some potentially relevant and sustainable ramifications! Looking at proposed expenses does not mean simply cutting costs, but rather getting the best, the most productive, for the money!
6. Review, in one line – article, base: You know, how to eat the elephant? One bite, at a time! When it comes to budgeting, this means that every single, non-fixed, line item needs to be thoroughly considered and reviewed, rather than what we often witness, which is a blanket approach.
Even when expenses need to be reduced, how and on what these cuts are made often makes a difference between groups who survive into the future and flourish and the rest of The package! Are you ready, willing and able to be a better, more prepared, focused leader, especially when it comes to creating a more meaningful and relevant budget?