- Be familiar with your company’s procedures and criteria for approving and managing capital expenditures. Your management will require a compelling return-on-investment (ROI) study (net present value, payback, breakeven, or internal rate of return estimates) vis-à-vis explicit or implicit hurdle rates.
- Establish clear links between your budget and corporate strategy. If your management can see the real benefits to the business, they’ll find the costs easier to absorb. Amazon’s customer-oriented culture requires every proposal for a new feature, product, or service to be pitched by means of a “Mock Press Release” arguing how a hypothetical Amazon customer would first learn about the feature and its utility.
- Don’t just roll your budget over from the previous year adding a certain percentage “and then some.” Many companies have adapted a cost-management tool called “Zero-Base Budgeting” that requires you to justify each line item in your budget as if it were an entirely new claim for an entirely new project.
- State your assumptions explicitly. Prepare worst-case and best-case scenarios to augment realistic forecasting of the future and help prudent decision-making. Keep your budgets ambitious but realistic.
- Allow room for contingencies. Avoid rigidities that could inhibit the quick and effective response to an unexpected event. Bring your contingency planning into the open for a careful review.
- Add some fat, but not too much. Keep this in your back pocket, but be ready to make some cuts by knowing what their impact can be. Be clear and confident when questioned about any of the numbers in your budget.
- Explain how true you were to the previous year’s budget. Make a distinction between controllable and uncontrollable budget variances. This will build your management’s confidence in your pitch for the year ahead.
- Put your budget proposal to test with your team and supportive peers. Encourage them to ask all the difficult questions they can imagine. They may not only know where the skeletons are hidden and help you with the answers you’ll need, but also become indispensable allies in getting your budget approved.
- To persuade each member of management, know what matters to him/her and link your budget to his/her objectives. Discuss your budget with the key decision-makers separately before a group discussion. (Management consulting firm McKinsey calls this technique “pre-wiring.”) By getting each participant’s buy-in, you can count on his/her support and avoid surprise reactions and disagreements.
Archives for December 2019
Inspirational Quotations #817
Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do.
—Jeremy Bentham (British Philosopher, Economist)
It’s fun to get together and have something good to eat at least once a day. That’s what human life is all about—enjoying things.
—Julia Child (American Cook, Author)
I do not feel that I am the product of chance, a speck of dust in the universe, but someone who was expected, prepared, prefigured. In short, a being whom only a Creator could put here; and this idea of a creating hand refers to God.
—Jean-Paul Sartre (French Philosopher)
Happy families are all alike; every unhappy family is unhappy in its own way.
—Leo Tolstoy (Russian Novelist)
Nothing is so perfectly amusing as a total change of ideas.
—Laurence Sterne (Irish Anglican Novelist)
Innovation by definition will not be accepted at first. It takes repeated attempts, endless demonstrations, monotonous rehearsals before innovation can be accepted and internalized by an organization. This requires ‘courageous patience’.
—Warren Bennis (American Management Consultant)
You find yourself refreshed in the presence of cheerful people. Why not make an honest effort to confer that pleasure on others? Half the battle is gained if you never allow yourself to say anything gloomy.
—Lydia Maria Child (American Abolitionist)
The desire for true happiness is nothing to feel ashamed about.
—Thanissaro Bhikkhu (American Buddhist Monk)
The love of liberty is the love of others; the love of power is the love of ourselves. We cannot force love.
—William Hazlitt (English Essayist)
The father of a daughter is nothing but a high-class hostage. A father turns a stony face to his sons, berates them, shakes his antlers, paws the ground, snorts, runs them off into the underbrush, but when his daughter puts her arm over his shoulder and says, ‘Daddy, I need to ask you something,’ he is a pat of butter in a hot frying pan.
—Garrison Keillor (American Broadcaster, Writer)
I wanted you to see what real courage is, instead of getting the idea that courage is a man with a gun in his hand. It’s when you know you’re licked before you begin but you begin anyway and you see it through no matter what. You rarely win, but sometimes you do.
—Harper Lee (American Novelist)