Al Budget

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Budget 101: It’s always important to watch your departmental budget, but during tough economic times, you’ve got to watch it like a hawk! In this Amazing Leadership podcast, Roy provides basic budget information to get you started on managing this key information.

Published in: Business, Economy & Finance
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Al Budget

  1. 1. Amazing leadership
  2. 2. Additional resources are available at http://www.amazingleadership.com contact: roy@amazingleadership.com or @rgatling on Twitter
  3. 3. Budget 101
  4. 4. As a business leader, you manage: -People -Planning -Problems (not always in that order!)
  5. 5. Budgeting is part of planning. Failing to Plan equals Planning to Fail
  6. 6. Typical budget is month-to-month for 1 year AND quarterly long term (3 years)
  7. 7. Two basic budget elements: - Income (sales) - Expense (rent, salaries, taxes)
  8. 8. Income is based on sales. If you are in a department that does not generate revenue, you are in a cost center.
  9. 9. Expenses can be: - Fixed (rent) - Variable (travel)
  10. 10. Expenses are grouped as: -Cost of Goods (COGS) -Operating Expense (OpEx) -Capital Expense (CapEx)
  11. 11. COGS is the expenses incurred in the manufacture of a product. This includes direct labor, materials and overhead.
  12. 12. OpEx is on-going cost for running a business. - Advertising - Telephone - Salaries -Taxes - Insurance - Depreciation
  13. 13. CapEx is cost to buy fixed assets or to add to value of an existing fixed asset. Assets typically in use for at least one year and not for resale. - Computers - Vehicles - Test Equipment
  14. 14. Create budget showing existing/projected sales and expenses.
  15. 15. KNOW your budget and review it monthly. Monitor OpEx CLOSELY.
  16. 16. If revenue is decreasing, you must decrease expenses at a faster rate. Compare the growth of your income to growth of your expenses monthly.
  17. 17. 3000 2250 1500 750 What do 0 Income Expense your 2000 numbers 1500 look like? 1000 500 0 Income Expense
  18. 18. Review your budget with your team as appropriate. Ask them for ideas and help in reducing expenses.
  19. 19. Meet with your Finance rep or accountant regularly.
  20. 20. Know your numbers. Watch Revenue & OpEx. Manage expenses AGGRESSIVELY.

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