The difficult budget - blood, sweat & spreadsheets

2010: Coming up with a good budget has never been more challenging

Companies are working hard on the spreadsheets during these weeks; simulations are made and all kinds of scenarios are being contemplated. For many this is not the first time this year. Many of them have already made budget no. 2 and no. 3 for 2009, which has not made it easier to start on 2010. Insecurities are the breeding ground for defensive budgets and an erratic course in regards to the company's visions.

Did we make it OK through 2009?
To some extent everyone knew that 2009 was going to be difficult, but in spite of that the year has been a challenge for most. For some the crisis became an excuse for not reaching objectives. Others have used the crisis to tighten up on things and sort out many years of growth with results that came all too easily. Those who achieved what they wanted have been working hard, but for the others it hasn't been easy, and in many places the sheep have been separated from the goats. The objectives for 2009 have to be reached to get a reasonable start in 2010. Many companies have become very good at cost management and have gained greater insight into the company. They have become more efficient in all respects. Now it is a question of learning from what you have been through and using the experiences offensively.

'Yes, if you decide to'
Are things going to turn around in 2010? The question is probably one of the most common in the budget process at the moment, and a question with as many answers as respondents. But: Yes, the tide will turn in 2010, if you decide it will. Markets are down 30% and even higher in some areas; but there is still a market, and whether the individual company turns the tide in 2010 or not will be determined by the skill of the business people making the decisions.

What is going to happen? Generally, in 2009 the 'spreadsheet battle' was won by economics. Good foundations have been created, wherever cutbacks were not too harsh. But in 2010 sales and turnover budgets need to regain lost terrain and fuel success.

An early start is needed for the process to be positive: Create consensus about the organisation and prioritisation for next year in the management group. Assess the organisation and make sure the right people are available next year, i.e. the people who can ensure the organisation will be in line with the objectives for 2010.

Phasing out, recruitment and possibly reorganisation will be required. During the same stage the image of the company's vision and mission needs to be recreated, so that the organisation knows what the managers want and can continue to focus on their day to day activities knowing where the company is heading and how it is going to get there.

Faith in victory shall move mountains
A clear picture of sales is necessary for budgeting. It is important to give turnover the time it needs in the coming year in a combination of traditional build-up and break-down budgeting. It is only natural that leaders have a clear picture of the possibilities in the market: but more than ever it is important that each salesperson is allowed to present their estimate for next year. This will ensure their insight into customers' potential is reflected in the budget and they take co-ownership of it. It is necessary to be offensive and realistic at the same time, and this can only take place in a partnership with management and sales working together to become a strong team.

When turnover budgets are in place it is time to reassess each salesperson’s salary. The good years with growth and huge figures have in several cases led to unrealistically high salaries, and if this hasn't been rectified during 2009, this is the time to do it. On the other hand there are a lot of bonus schemes, wherein reaching the objective it is quite impossible. This is de-motivating rather than motivating and therefore needs to be changed. Bonus schemes must be in line with the world we are operating in now.

Sales shall secure the company's victory, and it is important for everyone to take responsibility and believe that it is possible. The seeds of success for 2010 are being planted right now. The good budget is the best kick-off you can give your organisation.