We all know there are a lot of things on a small business owner’s mind. And one of those things might not be setting the budget for the year. But as a Business Advisor, you know the importance of this exercise, and why it should be at the top of the to-do list to enable them to be as successful as possible.
It can be easy to let responsibility and accountability fall by the wayside when there is no systematic approach to management, especially if an in-depth budgeting process was not part of their normal routine. But if the budgeting process is done correctly and with your help, it will push people to rise to the occasion, regardless of the size of the company.
The budget that is shared with employees needs to extend beyond the financial statements. By breaking down those overarching numbers into tangible targets such as retention/conversion rates, number of units sold, or average billing rate, it will provide both management and their team the context that they need to see the full picture, so that everyone can be held more accountable.
At the end of every month, the business owner can then sit down with their managers to review performance, where they can measure what was achieved versus what the goals were. Managers will be held accountable for the decisions they made that month; what went wrong? What went well? Should we change the way we look at this?
If they reached their goals, perhaps suggest to the owner to give them an increase. If they fell short, identify the problem and help rectify it. These conversations provide the empowerment to both employers and employees alike to make better decisions for the business, and to make them confidently.
The budget setting process is about finding out what works best for your client, even if it means disclosing more information at first than the business owner is comfortable with. They’ll need that guidance from you for how to proceed during this process. But if the managers and employees are not given the levers necessary or the right level of transparency, they can’t succeed in their job, and the company will never evolve. By empowering both the owners and their employees to make better decisions for the company, you’ll create a much more engaged client.
To learn some more specific tips, join us for the webinar "Forecasting More Profits with PlanGuru” on January 9th at 2:00pm Eastern Time.