Posts Tagged ‘budgeting’

Spend to Cut Costs

Although spend to cut costs may sound counter-intuitive, there is sound logic to it. Let’s dig a little deeper.

First, this is in no way referring to some of the loony ideas you may sometimes hear to Read the rest of this entry »

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Actively Manage Expenses to Increase Cash

Increasing cash involves paying attention to numerous things and acting in a timely manner. Let’s briefly look at how expenses impact this. This is the last of a series of posts on this topic, following ones on converting Read the rest of this entry »

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Why You Should Keep a Flexible Business Plan

What happens when your business veers off course and your business plan seems worthless?

The Unexpected

Imagine you’re on a vacation that involves a long drive. You’ve planned your route carefully to allow you to see the things you want and to make the drive as quick and efficient as possible. Then, unannounced and out of nowhere it seems, detours arise that throw a wrench in your well-made plans. For some this becomes a cause for getting upset, others are frustrated but deal with it as best they can, and still others see it as an opportunity. Making and using business plans can be a similar experience. Read the rest of this entry »

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Financial Checkpoints

For every business there are certain points in time that are ideal for assessing the progress of the business from a financial perspective. I think of these as financial checkpoints.

Just What is a Checkpoint?

For our purposes we can define a checkpoint as Read the rest of this entry »

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Unnecessary Spending

If we look closely we can see personal spending that was unnecessary. In business it can be more difficult to identify unnecessary spending. Ever wonder why? Read the rest of this entry »

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Unplanned Obsolescence

We’re all familiar with the concept of planned obsolescence, but what about unplanned obsolescence. Planned obsolescence is when a product is designed to have only a limited life because it becomes outdated due to loss of functionality, appearance, customer appeal, or perhaps simply wears out. In general, planned obsolescence is somewhat intentional, the idea being that customers will either have to or desire to replace a product when is becomes obsolete. Read the rest of this entry »

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Budgeting Realities

I’m not sure I’ve ever met anyone who truly enjoyed the budgeting process. I think there are some ways to make the process less difficult and more realistic. Below are some things that I believe are usually budgeting realities that hinder performance by distorting expectations.

What Shapes the Future

  1. “Change your thoughts and you change your world.” – Norman Vincent Peale
  2. “We cannot direct the wind, but we can adjust the sails.” – B.N. Woodson
  3. “You may have made some mistakes and you may not be where you want to be, but that’s got nothing to do with your future.” – Zig Ziglar

So, why did I start with these four quotes? Well, frankly, taken together they summarize what I believe is possibly the biggest pitfall to budgeting.

We Can’t Do Any Better

Quotes number 1 and 2 are critical. How often have you heard excuses (often disguised as good reasons) such as “We struggled to get the sales we did last year and the market looks even tougher this year”, or “We’re barely keeping our heads above water now, so how do you expect us to get by with less?” There are many along the same line, but the support for this is rooted in thinking. If you go into the budget process with the presupposition that the status quo is the best there can be, you start out defeated. It is critical to question your thinking and test it to see if it really holds true. Maybe there’s another way to sell more. Maybe there is another way to do things that makes it possible to accomplish your goals with fewer resources. But, unless you are willing to honestly question your assumptions you will miss opportunities. You must change your thinking to adjust your business sails. Chart a totally new course if necessary.

Stuck in the Past

It is common when developing a budget to use the prior year’s budget or actual results or a combination of the two as a base to build the current budget. At first that may seem like a very logical idea. But is it? To complicate matters some people fear change because something did not work out in the past. Their position is, “We tried other things before that didn’t work and just look where we are now.” It is one of the budgeting realities that past failure tends to make people afraid to again try something new. They’d rather stay where they are?

Look again at the third quote quotes above and let’s see how it relates to faulty thinking in the budgeting process. I realize that some people buy into the idea that history repeats itself, but does it have to? The answer is no.

So things you previously tried didn’t work out, and you don’t like where your company or department or even you are at present. So what? Unless you are willing to take risks where you are now is where you will be next year and the year after and the year after that and on and on. When it comes to creating a budget, one of the budgeting realities that must be faced is that business owners and their employees hold the key to the future, and unless they are willing to change then there will be no forward movement.

What about you and your company? Is creating a budget just an exercise in futility and a mere formality? It doesn’t have to be. Get out of the past and be willing to change.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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Out of Control Expenses

Expenses are one of those things that sneak up on us. For a few months everything may seem reasonable, but suddenly everything seems to change for the worse and you have out of control expenses. You’ve probably experienced this on a personal level. You may find yourself asking, Read the rest of this entry »

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3 Ways to Cut Costs

A recent article about cost cutting and some of the reasons the process failed struck me as useless as far as providing real guidance on cutting costs. The focus seemed somewhat generic with such observations as:

  • It’s getting harder to cut costs (No kidding? Companies have already done significant trimming in response to the economy. But, how does knowing it is harder to cut costs help?)
  • It is difficulty to maintain cost cuts. (Again, no kidding? Although a few suggestions were offered, there was really nothing new that didn’t itself present something else to be maintained)

So, let’s take another look.

Is That Really Needed?

The one helpful thing this article did offer was the old idea of Read the rest of this entry »

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Outsource and Save

There is a tendency for business owners to try and do it all. Often that is not the best use of resources. In a previous posting Spend Wisely – Go Part-Time I talked a little about the financial advantage of outsourcing. In particular I compared my experience as both an employee and a part-time CFO/Controller. In this article I looked mainly at two things; cost savings and best use of talent. Now let’s consider other benefits to using outside resources.

First Things First

Just to summarize, the first point previously discussed had to do with having a highly skilled employee spend most of their time on tasks that really did not require their level of expertise. In the second point an example Read the rest of this entry »

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