Budget 101: It’s always important to watch your departmental budget, but during tough economic times, you’ve got to watch it like a hawk! In this Amazing Leadership podcast, Roy provides basic budget information to get you started on managing this key information.

1. Amazing
leadership

2. Additional resources are available at
http://www.amazingleadership.com
contact:
roy@amazingleadership.com
or
@rgatling on
Twitter

3. Budget
101

4. As a business
leader, you manage:
-People
-Planning
-Problems
(not always in that order!)

5. Budgeting is part
of planning.
Failing to Plan
equals
Planning to Fail

6. Typical budget is
month-to-month for 1 year
AND
quarterly long term
(3 years)

7. Two basic budget elements:
- Income (sales)
- Expense (rent, salaries, taxes)

8. Income is based on
sales.
If you are in a
department that does
not generate revenue,
you are in a cost center.

9. Expenses can be:
- Fixed (rent)
- Variable (travel)

10. Expenses are grouped as:
-Cost of Goods (COGS)
-Operating Expense (OpEx)
-Capital Expense (CapEx)

11. COGS is the expenses
incurred in the
manufacture of a
product. This includes
direct labor, materials
and overhead.

12. OpEx is on-going cost
for running a business.
- Advertising
- Telephone
- Salaries
-Taxes
- Insurance
- Depreciation

13. CapEx is cost to buy fixed
assets or to add to value of
an existing fixed asset.
Assets typically in use for at least
one year and not for resale.
- Computers
- Vehicles
- Test Equipment

14. Create budget showing
existing/projected sales
and expenses.

15. KNOW your budget and
review it monthly.
Monitor OpEx CLOSELY.

16. If revenue is decreasing,
you must decrease
expenses at a faster rate.
Compare the growth of
your income to growth of
your expenses monthly.

17. 3000
2250
1500
750
What do
0
Income Expense
your
2000
numbers
1500
look like?
1000
500
0
Income Expense

18. Review your budget
with your team as
appropriate.
Ask them for ideas
and help in reducing
expenses.

19. Meet with your
Finance rep or
accountant regularly.

20. Know your numbers.
Watch Revenue & OpEx.
Manage expenses
AGGRESSIVELY.