Building Your Annual Budget

By F. John Reh

Every year we go through the same budget cycle. Every year we have the same frustrations. And every year we end up with a budget that doesn't make sense. There is a better way.

The Usual Way

• Get the preliminary materials from the Finance Department with the necessary forms to complete and submit
• Complain that the forms really don't fit our department well, but we complete them and submit them, usually on time
• Wait while Finance does some magic and the budget comes back with a note from above to cut it by some unreachable number

• Trim out the "padding" we initially put in and then look for other stuff we can cut without it hurting too much
• Resubmit the budget
• Sometimes repeat that cycle
• Finally get a note from Finance with the approved budget for next year, even if it already is next year
• Look at what's left in the budget and wonder how we can possibly do what we have to for such a small amount
• Promise to give the budget more attention next year.

What's Wrong With That?

You have to remember that Finance is a staff function, not a line function. Their job is to do the work of making sure everyone submits the numbers, collecting and compiling those numbers, and presenting those numbers to the decision makers in a way that makes sense. Their job is not to decide how big or how small a budget you need. While they may be the people who tell you that you need to cut your budget request by X percent, they really are only relaying a decision from someone above them. That decision may not be as fixed, firm and final as they make it seem.

The Better Way - What You Need To Know About Budgets to Win

There are two important things to remember as you prepare and submit your budget request.

1. Keep the budget discussion between you and your line manager. Use Finance to help, but don't let them get in between you and your boss.
2. Keep a strong linkage between budget costs and expectations of work to be performed.

For instance, don't just show a need for 35 people in the telephone support group, but show that five of them provide the second shift and third shift coverage.

If you are told to cut 15 percent from your budget, tell your boss you can achieve that reduction, but it will mean not having anyone in your support center outside regular business hours. Keep the budget linked to the services on which it will be spent.