Whether you are at the bottom of the proverbial totem pole or at the peak, you should take pride in and be respectful of your company’s budget and business plan. It takes a lot of time, effort, and knowledge to go through and meticulously plan what is going to come in the next six to eighteen months.
The budget provides a lot of information and direction to the board of directors, the executive team, management, and even the everyday employee within your company. The budget shows the trends on revenue for what has happened in the past, as well as what is projected to happen in the future. The business plan will show the future of the organization and what you are going to do to get there. Take the time to look them over and understand where your financial and management teams predict your company will be in the future, as well as how they are planning to achieve this vision.
You can take in the entire budget or you can just look at your department’s objectives and expectations for the future. While just looking at your own department’s budget, take notice of the revenues and the expenses. The expenses will show you if there is a cost increase happening for certain products, or it will show you if any big expenses are expected to be incurred in the upcoming year.
There can be many moving parts within a budget. A good budget is not just throwing a dart at a board and hoping it is going to be right. Nor is it seeing a fortune teller for a crystal ball reading. It requires copious amounts of raw data pulled together as well as planning with the sales team on what will be forecasted in the future.
One way of looking at the budget is as the numerical representation of the company’s business plan. It will help lead the way and can be used as a tool to measure how your company is doing in comparison to where the business plan envisions you will be. To better describe how you would use the budget and the business plan, below are some examples.
If you are a teller on the front lines, the business plan will indicate you what your company is planning to market more aggressively, whether it be credit cards, personal loans, or closed end loans. Meanwhile the budget would tell you what the volumes of revenue are anticipated to be closed each month. If you are in the loan department, the business plan could dictate to push more commercial loans. The budget will tell you how many loans your company is planning to increase based on the revenue forecasted for that product. We all know any revenue is good revenue, but there may be some services that can cause increased profits for your company based on their margins, which you will hopefully see reflected within the budget and business plan. These examples are ways you can take not only your budget, but your business plan and then create a plan to execute the expectations set forth every month.
No matter what your position is within a company, it is always good to pay close attention to your company’s forecasted budget alongside the business plan. It will show you the anticipated growth, the health, and the expectations of your company over the next six to eighteen months. The budget reflects what volumes of revenue and expenses are in quantified dollar amounts that are going to be anticipated soon. The business plan tells you how you are going to achieve the monetary goals set forth by the budget.
If you have any questions, look at the budget and speak with your finance team to learn more about what each area of the budget means or reach out to your management team to go over the company’s business plan.