Join Britt Andreatta for an in-depth discussion in this video Managing budgets, part of Management Fundamentals.
- Another key aspect of managing the business includes understanding your role in the budgetary process. Whether you work for a small business or a large corporation, learning to manage your budget is a vital skill that you'll want to master as early as possible, and here's why. If your team is successful in achieving its goals, but always goes over budget, you create financial problems for your organization. But your career will thrive if you're the manager who stays within their budget, and even looks for ways to reduce costs and drive efficiencies. Managing the budget means that you authorize expenses in accordance with the budget that was submitted and approved, and you continually monitor the amount of spending to ensure that you do not exceed the budget.
To successfully manage your budget, I recommend using the following strategies. First, be informed about financial matters. You want to learn about business budgets, in general and your organization in particular. There are some common terms and practices that are widely used, and then there are things that are specific to your situation. For example, there are generally two types of budgets for expenses, or money that's spent. Capital expenditures are any costs related to the physical space, like rent and electricity, and equipment such as copiers, desks, and computers.
These are generally items that are used for more than a year. And the operating budget are the expenses affiliated with the day-to-day running of the organization such as payroll, supplies, travel and professional development. Organizations also track income or revenue. This is the money that comes in through sales, grants and other sources. Revenue is continually analyzed, comparing predicted income to what actually comes in, and adjusting the budget accordingly. This means that in some organizations budgets are very fluid and can be augmented or cut as the year unfolds while others are firm and don't adjust at all once they're set.
Most organizations have an annual budget that is broken down into quarters and then further into months and sometimes weeks. Obviously, you'll want to know what is true for the budget you manage, and this is why it's so important to understand the specifics of your budget, the second strategy. You'll want to ask questions like...
Third, have a system for tracking your budget. This may already be set up, and you just need to learn how to log-in and use the system. But if you work at a smaller organization, you may be working from spreadsheets, entering receipts as you go. The most important thing is to have a way to know where your budget stands on a month-to-month basis. This might be something that you maintain yourself, or delegate to an employee. Just remember that you are ultimately responsible for the budget, so you still need to review their work in case they make a mistake, believe me it happens.
Generally, the larger the organization the more formal and complex the budget process is. There can be a range of approval processes, forms to file and supporting documents to submit. In addition, if your organization works with any public funding, there will be very specific stipulations about how money can be spent. For example, entertainment and travel expenses often have an elaborate pre-approval process that can take weeks. Or you may be required to seek bids from several suppliers through a formal purchasing process. When you manage a budget, it's expected that you adhere to these policies and procedures whether or not you're provided training.
It's assumed that you will seek out the guidance you need to be in compliance, which brings us to our fifth, and perhaps, most important strategy. Your organization might offer formal training on the budget process, and if so, you definitely want to take advantage of that. If not, you can also support your own success by asking your supervisor or a colleague in the finance department to walk you through what you need to know. There are some great books on business management and many community colleges also have business courses available to the public. Managing the budget may seem daunting at first, but these strategies will help you become more comfortable and you'll reap a side benefit of being a better manager of your own personal funds at home.
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- Choosing a management style
- Hiring employees
- Coaching employees
- Managing team performance
- Establishing trust
- Motivating and engaging others
- Delegating responsibilities
- Avoiding micromanagement
- Managing remote employees
- Knowing HR regulations<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.