Your teams have spent months creating, adjusting, re-creating, and finalizing your budget for the next year. Managers have input their needs for equipment, staff, and training. Sales teams have projected their volumes.
Now you’re ready to bring it to the board.
But are you? Is the board going to care that you’ve allocated 20% of IT’s budget for training? Or that accounting has planned $5,000 for a new printer?
Not really. Not unless those are the answers to some very important questions that the board will be laser focused on.
What are Your Plans for the Organization?
This may seem like more of a strategy question than a budget one, but the two are heavily intertwined. As you tell your board what your goals are for the business – market growth, additional teams or staff, heavy investment in R&D – they may be excited at the potential. At the same time, they will also want to know that you’ve considered what it will take, financially, to accomplish those plans.
Showing your board how you’ve reflected your plans in your budget presentation will be key to getting approval and illustrating that you’ve taken all aspects of your goals into account.
Can You Pay the Bills?
This may seem like an obvious question, and one that your organization has spent a lot of time answering with budget planning. But it is one of the core responsibilities of your board – to make sure that the company is being fiscally responsible while meeting its goals.
Companies have responsibilities to its vendors, employees, and investors. Funds are needed to keep the business operational. Your budget should account for your expected expenses and where and how much income you’ve projected, as well as your current cash position and investments. With this information, the board will be in a better position to approve your budget or guide you into a more solid standing.
Are Your Income Projections Reasonable?
It’s easy to be optimistic about sales – or pessimistic if you’re coming off a particularly difficult year. When the board reviews your budget, they will want to understand how much risk is associated with your income projections.
To get board buy in, be prepared to present data to support those projections. That data may be in the form of actuals from previous years, in competitor performance, or even in forecasting created through the use of far reaching data points pulled together through the use of big data and business intelligence. Wherever your information originates from, it should be in a format that makes sense to the board while pointing to the affects the data will have on business outcomes.
What Happens if it All Goes Wrong?
Plans go awry. Sales flop. Products take off. Your board will want you to show that you’ve considered a Plan B – what the business will do if things don’t go according to your budget forecasts.
Having what-if scenarios prepared for board review will build confidence in the budget you have laid out. Your board will understand that you’ve got a plan in place should the winds change and you need to set a new course. With alternative scenarios, the board will have a clear view of how closely you’ll be able to keep to the “happy path” of your budget plan, and how you’ll continue to achieve your business goals in the face of adversity.
Your board is there to help guide and direct your business and ensure that the company is meeting obligations to both business partners and investors. By having a budget that answers their questions before they are asked, your board is better prepared to give you the guidance needed to move in the right direction.
Small to mid-market organizations rely on Centage Corporation’s Maestro Suite, which includes Budget Maestro™ to help them keep track of and manage their cash flow. Budget Maestro improves the efficiency and effectiveness of business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.