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January 7th, 2009






 

Budgets as Signals

Budgets do two important things:

1) Reflect the organization's priorities
2) Communicate to everyone what is important (and what is not)
A budget should reflect clear priorities. To declare spending parameters ahead of achieving that clarity is tantamount to prescription before diagnosis.

Hint for effective budgeting: Adopt a zero-base approach. Build the budget from scratch not as a derivative from prior years.

Here's the drill, in a simple three-step process (the simplicity of which belies its arduousness.
1) Start with a blank piece of paper (or an empty spread sheet).

2) Answer these questions:
     A) What are we trying to accomplish?
     B) What are the most proficient means to accomplish those objectives?
     C) What do those activities cost?
     D) How can we do it for less?

3) Draft & submit the budget with the confidence born of reality-based preparation.


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Don Blohowiak, a management consultant and popular conference speaker, is the author of several business books. The executive director of the Lead Well® Institute in Princeton, NJ, he may be reached at http://www.LeadWell.com/.

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