al budget
Post on 19-Oct-2014
1.141 views
DESCRIPTION
Budget 101: It’s always important to watch your departmental budget, but during tough economic times, you’ve got to watch it like a hawk! In this Amazing Leadership podcast, Roy provides basic budget information to get you started on managing this key information.TRANSCRIPT
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Amazingleadership
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Additional resources are available at http://www.amazingleadership.com
@rgatling on
contact:
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Budget 101
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As a business leader, you manage:-People-Planning-Problems(not always in that order!)
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Budgeting is part of planning.
Failing to Planequals
Planning to Fail
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Typical budget is month-to-month for 1 year
AND quarterly long term
(3 years)
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Two basic budget elements:
- Income (sales)- Expense (rent, salaries, taxes)
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Income is based on sales.
If you are in a department that does not generate revenue, you are in a cost center.
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Expenses can be:
- Fixed (rent)- Variable (travel)
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Expenses are grouped as:
-Cost of Goods (COGS)
-Operating Expense (OpEx)
-Capital Expense (CapEx)
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COGS is the expenses incurred in the manufacture of a product. This includes direct labor, materials and overhead.
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OpEx is on-going cost for running a business.- Advertising- Telephone- Salaries-Taxes- Insurance- Depreciation
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CapEx is cost to buy fixed assets or to add to value of an existing fixed asset. Assets typically in use for at least one year and not for resale.- Computers- Vehicles- Test Equipment
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Create budget showing existing/projected sales and expenses.
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KNOW your budget and review it monthly.
Monitor OpEx CLOSELY.
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If revenue is decreasing, you must decrease expenses at a faster rate.
Compare the growth of your income to growth of your expenses monthly.
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0
750
1500
2250
3000
Income Expense
0
500
1000
1500
2000
Income Expense
What do your
numberslook like?
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Review your budget with your team as appropriate.
Ask them for ideas and help in reducing expenses.
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Meet with your Finance rep or
accountant regularly.
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Know your numbers.
Watch Revenue & OpEx.
Manage expenses AGGRESSIVELY.