Zero-based budgeting - start fresh, achieve more!Written by Frank Williams
Every year, good business executives develop a budget. Peek into planning sessions and operating mode of any well-run company and you will find a strong budgetary process at work.Simply put, a budget is a financial tool -- sort of a "spending-guide'. But, it can also be a healthy discipline forcing company to think and constructively debate investments and priorities for coming year. As such, senior executives should demand a tight alignment of corporate goals to annual budget. A well-developed budget puts into place necessary structure to measure, manage and control variety of spending within enterprise. Savvy company leaders also utilize budget process to communicate to rest of company priority of various projects as well as amount and timing of funds allocated. The annual budget and its monthly review and quarterly updates memorialize and documents companies financial intentions for coming year. This fulfills a requirement demanded by most banks and lending institutions. However, there is an inherent trap that most companies fall into when developing yearly budgets. And it is so insidious and subtle, that most senior executives unwittingly become part of this annual charade without realizing it. Global Marketing calls it ‘creep-factor'. What is creep-factor? Some clients of Global Marketing have guessed it is an apt description of their firm's newly hired CFO. Some have indicated that, as in likes of ENRON, WorldCom and etc., it must be a new method that defines profit. And others thought it might be a ratio of lost customer revenue to firm's competitor. All reasonable guesses, but none correct! Global Marketing Inc. has many clients and sooner or later topic turns to ideas on cost-cutting measures. At this point Global Marketing team asks to review summary budget schedule for past 3 years. All key expense items are analyzed with budgeted increases from previous years highlighted. With few exceptions, we find that budgets grow (creep) by 5-12% per year usually without an increase in revenue (shipments) line. And even if top line does increase, this only temporarily masks expense increase and inevitable cost-cutting sessions to come.
| | GET OUT THOSE LEGOSWritten by Dr. Dorene Lehavi
Many of my clients are working harder than smarter. This is not a put-down of their intelligence. It is a statement about conventions of way most of us live and work. Without a concerted effort to step back and take an objective look at how we function day in and day out, we find ourselves subject to old ways of doing things without periodic checkups to see if they are working. The first step to changing high stress road to burnout approach to your work day is to build in “joy breaks” or mini refreshers. It is not true that you get more done if you don't stop for lunch or other refreshing breaks during day. On contrary, I always remember days I sat at my desk searching for a solution to a particular problem. I tried very hard to come up with answer and was not successful. In afternoon of second day, I threw my hands in air, exasperated, and went out to pull a few weeds from my garden. That's when light bulb went off and I had answer. In order to have meaningful joy breaks a plan is necessary. Start by making a list of things you consider fun and refreshing that can be done in 5 or 10 minutes, a half hour, an hour or more. Then list supplies you will need to have on hand when you want to do that activity: magazines, puzzles, a musical instrument, books, CD's, running shoes, Legos, phone numbers of friends or family, gardening gloves, crayons, paints, jelly beans, yoga instructions, a basketball, a movie schedule, etc. Make sure that your breaks have NOTHING to do with your work.
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