Budgeting can be like going to the dentist — not high on your list of favorite activities. However, if you go often and do the recommended preventative maintenance, you are much less likely to end up in a painful and costly situation!
The key to successful budget management is “early and often.” Below, we’ve identified three steps to take in building the annual budget, setting project budgets, and managing budgets on an ongoing basis:
- Select methods that fit your company culture such as zero based budgeting, standard costing models, top-down target driven, inflation factors, prior year base, stop/start/continue, etc.
- Lay the groundwork up front so everyone in marketing consistently applies the budget methodology. Set the standards for level of detail required, standard costing and modeling, and ratios requirements (working versus non-working, media versus production, fee versus creative, etc.)
- Train the team and review the budgets during the process versus after the budget is submitted. Giving a list of review tips, frequent errors, and issues to avoid can be very helpful for your marketing team.
- Consider a model approach with standard cost ranges for various components of production.
- Define the components and potential costs up front with agreement from all stakeholders.
- Explain variations to the standard costs and obtain senior management approval to operate outside the standard, as needed.
Ongoing Budget Management
- Recruit a champion to manage project budgets and implement process enhancements.
- Analyze, understand, and agree upon detailed budgets prior to the start of any project.
- Wrap-up and reconciliation are just as important as the planning phase and can help your team learn from issues and collect remaining funds for re-investment.
In summary, here are 5 additional things to keep in mind:
- Clarify expectations with the team up front before budgets are prepared and submitted.
- Have a formal review process for variances to standard costing models used in budgeting.
- Have a formal approval process for changes to project scope.
- Assign responsibility for ongoing budget management.
- Be the team that gets more money due to your track record for effectively and efficiently managing your budget!
Being involved early and often are the keys to success in budget management. Check out our upcoming post for tips and key watch-outs for implementing improved budget processes in your company.
Written in collaboration with Angela Saferite.