Budgeting essentials for new managers

 via management.about.com   Article

“Chances are, when someoneis promoted to their firstmanagement role, it will bethe first time they will have tomanage a department budget.

Most new managers receivelittle or no formal training in how to develop a budget forecast, track theirexpenses, and how to make mid-year adjustments. They might just be handed a spreadsheet or report from their manager or the finance department and expected to already know how to do it or learn by trial and error.

While “trial and error” can be an effective way to learn a new skill, it would be better if anew manager didn’t have to make too many painful errors.

Here are a few lessons learned from my own trial and error learning that I think most new managers could benefit from:

1. Invest the time to learn right from the start. There is no better time to ask ‘stupid’ questions than when you are brand new to something and have never done it. Better to ask and spend the time upfront learning, rather than wait until someone has to point out your mistakes. Request time from your manager (or predecessor if you can) to review theunderlying philosophy, the overarching goals, the format, and each line item. If your organization has a finance person, ask that person to spend time with you as well. Most will be flattered and willing to share their expertise. …

6. Track your expenses monthly and make proactive corrections. Don’t assume that ‘someone’ will tell you when you are over budget. In fact, you might even have to ask for monthly reports, or keep track yourself. Don’t wait until the end of the year, when it’s a surprise (to you and your boss). By then, it’s too late to investigate and make corrections. Be accountable, measure yourself, and proactively report to your manager.

7. Be transparent and involve your team. Share your budget with your team, perhaps even getting them involved in setting up the forecast. Involving your team and helping them understand the budgeting process creates a sense of shared ownership, and encourage your employees to find creative ways to manage expenses.

8. Be strategic. Don’t just take last year’s actuals and add 10% to the next year’s forecast. Start with developing a strategy and goals, then determine the resources required to achieve those goals. If you require more than last year, then prepare a business case to justify your request for additional funding.

9. Don’t overdo it. While managing the budget is an important role for a manager, never lose sight of the most important assets: your people! Make sure you are spending at least 5X the amount of time developing your team that you are crunching numbers.”

 

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