The Most Important Budget Management Skill Every New Manager Should Learn
How do you ask for budget? They don't teach that in school or new-manager training. But it's one of the most important budget management skills you can learn. Here are some things I've picked up in my first year as a budget owner.
How do you ask for budget?
It’s not something they teach in school. But it’s the most important part of your job. Even the best managers can’t hit goals if they don’t have enough resources in the first place.
Here are some tricks I’ve picked up that help me get budget to hit my goals in my first year as a budget owner.
1. Understand how finance views the business.
Every finance team has a model. Every model has its levers. Understanding what these levers are can help you define your strategy and budgets.
If you can speak the same language as your finance team, the budget management process gets easier.
2. Define your cost per result.
You can use your budget to do three things:
- Fuel existing assets
- Make them more efficient
- Invest in new ones
If you’re fueling existing assets you should already know your cost per result (e.g. cost per lead, ARR per head, etc.). If you’re using budget to improve those assets, or investing in new ones - take a guess. Use industry benchmarks to support your claims.
If you can express your plan as an equation, you can…
3. Give your leadership team options.
Everybody is competing for limited budget. Giving your leadership team options will showcase your ability to think company-first. By expressing your plan as an equation, you can easily create different combinations of budgets and results.
I like to come up with 2-3 plans and explain the tradeoffs - do you want a plan that is cheaper but high risk, or expensive and likely to work?
4. Track your budget-to-actuals often.
Your plan will be wrong the second the quarter starts.
You’ll need to adjust your budgets on a weekly basis. But your finance team can’t update budget-to-actuals more than once a month. How can they if no-one submits their expenses and invoices until the end of the period?
You have three options:
- Run blind and hope you don’t go over budget.
- Build your own tracker. This usually involves an excel spreadsheet, some vlookups, and a lot of slacks and emails. You’ll need to set up a process for your team to update it and assign expenses to the right categories. This is on top of filing expense reports separately for finance.
- Automate the whole thing. Software like Lola.com automatically categorizes expenses and updates budget-to-actuals in real-time.
Click here to learn more about real-time budget management. Because you’ve got better things to do than tracking expenses. Right?