It is important to know how to get your budget approved to get your projects in place for the new year.
Responsible leaders know how important an annual budget is to the operations of a department. Not only must they understand and manage financial numbers, they are also responsible for effectively presenting their budget to decision-makers.
Unfortunately, inadequate or poorly thought-out budgets can cause difficulties when resources are not available to run a department.
What are the benefits of using a budget proposal?
A budget proposal is an essential tool in the planning and execution of any project and can provide a wide range of benefits to all parties involved.
A clear budget proposal allows for financial transparency, making finances an open topic of conversation as soon as a project idea is developed.
This ensures that everyone involved can see how their work contributes to the overall objectives and goals of the project and allows stakeholders to connect with the internal work process.
Furthermore, a budget proposal offers stakeholders an overview of the value and impact that the project brings both internally within your organisation and externally.
Having this information from the start makes it easier for decision-makers to assess whether or not investing in a proposed project will justify its cost in terms of return on investment (ROI).
What’s more, providing detailed budgets allows for proper resource management along each step of the way, enabling team members to maximise efficiency throughout their projects.
To help you present your budget in an effective way and gain the approval of decision-makers, we've put together five steps that guide you through the process.
These steps provide you with a roadmap for creating the perfect pitch. Give yourself the best chance at success by demonstrating just how much thought and planning has gone into your proposal.
1. Reevaluate company and departmental goals
You must go through the process of reevaluating company and departmental goals when it comes time to develop and set the annual budget. In today's ever-changing world, it is more important now than ever for businesses to stay flexible and adaptable in order to survive.
With economic slowdowns and changes in markets, goals often have to change accordingly. The adaptation of a budget should ensure that it reflects any new departmental objectives as well as management directives.
The assessment of goals should consider all historical data leading up to developing the budget. A thorough review of past successes, failures, trends, and other aspects should be analysed in detail prior to creating something new.
Allocation of resources needs to represent each goal appropriately according to priority; this will enable departments and companies alike to maximise value with finite funds from the approved budget.
Staying aware of goals while creating the budget will allow for successful progress towards achieving those same objectives throughout the year.
2. Gather budgeting information
When gathering budgeting information it is important to dedicate enough time to ensure that all necessary and accurate data is captured. You should look beyond the typical departmental expenses from the previous year as those may not accurately reflect current data.
A thorough review of the actual records will help find any discrepancies between budgeted items and total payments.
When building a budget, there are many approaches you can use depending on your industry, company, or department type. Common types of budgeting include:
- Incremental budgets which are based on a predetermined spending amount each year
- Zero-based budgets which start with no funding allocated and then allocate funds area by area
- Performance-based budgets, which measure outcomes of activities to decide whether they should be increased or decreased
- Activity-based budgets focus on individual activities rather than departments
- Line item budgets which require an itemised list of each expenditure for each object such as a program
All these budgets require detailed research in order to gain enough knowledge to build the most suitable financial plans.
3. Set up the annual budget
Before setting up the annual budget, it is important to first assess the company's needs and resources. In order to do this effectively, it is necessary to have a clear understanding of what the expenses are expected to be in the upcoming year.
From here, you can develop an appropriate budget plan for the upcoming year based on estimated revenue and fixed costs.
Examples of fixed costs could include rent or loan payments that do not change with increased or decreased production or sales. On the other hand, variable costs such as production supplies and delivery fees should be accounted for through budgeting that reflects changes in volume.
In terms of implementation, there are many approaches you could take when creating the annual budget. Many businesses opt for using spreadsheets or specialised budgeting software to visualise and understand their overall financial outlook for the coming year.
Depending on how much detail is required in assessing each element of your budget, accounting professionals can also provide efficient technical services for organisations that may not have such expertise inside their organisation.
Having a detailed understanding of their financial structure in advance allows companies to be better prepared when they decide upon expenses throughout the year and make strategic decisions regarding spending habits.
4. Create a convincing budget presentation
Creating a convincing budget presentation is a critical step in the corporate budgeting process.
Before beginning your presentation, it’s important to outline and review the annual budget so that your department goals align with the company’s larger mission.
Rushing into creating a presentation without first setting up a strong budget could be disastrous. At a minimum, create an outline of measurements which should include revenues, expenses, and profits as well as estimates for upcoming fiscal years.
When you begin planning out your presentation, make sure to include relevant information that will persuade decision-makers.
A strong title can help to draw their attention right away, making them more likely to give consideration to your proposal. It’s also important to clearly explain why specific budgetary items matter to both your department and the company overall.
Emphasise what kind of cost savings or revenue generation can be expected from implementing the proposed course of action.
As soon as you have all the necessary data ready, build a professional presentation that shows all the important details in a clear and organised way to make your case strong.
5. Present your budget and win!
Presenting a budget can be tricky, and it is important to make sure you get your message across in an effective way.
In order to have success in presenting your budget, there are a few key tips to keep in mind.
Firstly, it is important to keep the presentation brief- no more than 10 slides- that way the information won’t be too overwhelming or difficult for listeners or presenters.
It is also important to include charts, diagrams, graphs, etc when presenting information; this helps give a clear visual representation of the data.
Additionally, showcasing problem-solving skills by providing solutions helps progress the conversation further and shows you are reliable and competent at making strategic decisions.
Presenters should remember that communication requires charisma and confidence. Speaking clearly about each slide will help convince any listener that the decision-makers are trustworthy assets.