Staying Alive in This Lingering Recession: Three Ways to Turn Your Budget into a Survival Tool

The May 28th issue of the Wall Street Journal reported The U.S. is experiencing the most protracted, job-market downturn since the great depression." This economic slump continues to linger longer than the nations economists thought it would. As smaller businesses struggle to maintain or stay alive, they often overlook a key survival tool -- their budget process," says Ron Rael, CPA an expert in business budgeting. Critical to survival today is an effective budget that lives up to its purpose: to allocate and control spending decisions and to ensure that every decision is 'smart and moves your organization forward in achieving its objectives and goals. Yet many business leaders forget this tool due to the numbing uncertainty that this recession is creating."

Does Your Budget Work?

For your budget to accomplish what it is designed to do, four elements must be supportive of budgeting. If even one of them is weak or not functioning properly, then the resulting product will be ineffective. These four required components are: 1) Budget System, 2) Budget Mechanics, 3) Environment, and 4) Mechanism for Change.

Guess which ones are most often MIA (missing in action)? All firms do a great job with the system and mechanics because its easy. Where nearly all firms fall down is putting into place the hard ones: 3) A culture that supports both accountability and visionary planning, and 4) The ability for the budget to adapt quickly as the business conditions change.

How Can the Budget Reflect Todays Reality?

Solution #1 -- Remove the Fear Factor
A powerful and easy way to improve your budget culture is to remind everyone loudly and often about Budget Rule #3: Budgeting is about potential! Each year as you draft your budget what you are really doing is attempting to put into written form your firms potential -- potential revenues, potential profits, and potential ability to satisfy your customers with the financial and people resources you plan to have in place.

Solution #2 -- Measure and Reward What is Most Important
Your companys Critical Success Factor (CSF)" is the starting point for a budget that adapts to changing conditions. You start by defining your CSF, setting targets for it and a way to measure it. You do this for every revenue center, each department, division and team. Once you have identified them and determined how to best achieve your CSFs, only then do you build a budget. Your budget is built around your success factors, not the other way around. You finish with a process to reward and honor employees who stay in tune with their units success factors. What gets measured will get managed. What gets rewarded will get repeated.

Solution #3 -- Tell Them Stories
Stories are powerful because everyone loves to hear them and good stories carry a message that people remember.

A new tool is now available that will help you to use stories as a means for improving your budget process. 13 ½ Strategies for Winning the Budget Wars highlights 14 real-life tales about how the budget either worked or didnt. Each story contains a key principle about great budgets. Its format is designed to spur the reader to create an action plan as he/she reads the book. It contains wry humor that injects fun into a subject that many people take way too seriously. The book can be purchased through your favorite books store and online at www.ronrael.com.

A nationally recognized expert in corporate culture, Ron Rael, CPA provides insights and practical tools to help his clients create a Fast Forward Culture so they are quickly "Working Smarter... Together... Profitably!" His custom-fit training and coaching solutions give you the tools you need to design your own unique culture mosaic.

To arrange an interview, contact Michelle Cash at (425) 653-7733. Futher information is available at Rons website www.ronrael.com.