Business 101

As the new business year starts I’m reminded of some basic principles that seem so often to be forgotten or applied topsy-turvy. You set a goal for yourself your team your unit or your business. You develop a plan of how this can be achieved (your strategy). You determine what this plan will cost to implement (your budget). You review your goal against your budget, and adjust for the possible (your forecast – revenue, margin, estimated GP). Seems a simple process, but often habit or circumstance or ignorance leaves you setting budgets before coming to grips with a goal or working through the mechanics of your strategy. Often this results in frequent reforecasts or adjustments, and when large enough can cause some serious explaining to your boss, your manager, your board, your shareholders or worse, your partner (my wife in my case…).

I really recommend a calm early approach to the new year, full of circumspection of the past year, honest reviews of achievable goals and detailed strategic sessions to determine just what it will take to reach your goal/s. Then build your budget with the single focus on enabling that strategy.