Budgeting for Managers

220 Pages·2003·8.519 MB·English

by  Sid Kemp, Eric Dunbar

Budgeting for
Managers
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Negotiating Skills for Managers by Steven P. Cohen
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Managing Teams by Lawrence Holpp
Hiring Great People by Kevin C. Klinvex,
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Retaining Top Employees by J. Leslie McKeown
Empowering Employees by Kenneth L. Murrell and
Mimi Meredith
Presentation Skills for Managers by Jennifer Rotondo
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The Manager’s Guide to Business Writing
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Skills for New Managers by Morey Stettner
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To learn more about titles in the Briefcase Books series go to
www.briefcasebooks.com
You’ll find the tables of contents, downloadable sample chap-
ters, information on the authors, discussion guides for using
these books in training programs, and more.
A
B r iBeof coaks e
Budgeting for
Managers
Sid Kemp
Eric Dunbar
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DOI: 10.1036/0071416803
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Contents
Preface ix
1. Budgeting: Why and How 1
Why Make a Budget? Who Reads Budgets? 2
Eight Steps to Creating a Budget 5
Success Review 18
Manager’s Checklist for Chapter 1 18
2. The Parts of a Budget 20
Time Periods of Your Budget 20
Budget and Vision 23
Forecasting Income 29
Expense Categories vs. Account Codes 32
Key Accounting Concepts 34
Manager’s Checklist for Chapter 2 39
3. Gathering Production Figures 41
Gathering Past Figures 42
Working with Multiple Periods 45
Working with Account Categories and
Line Item Names 50
Evaluating the Quality of Your Information 50
Working with Multiple Periods and Trends 52
Manager’s Checklist for Chapter 3 53
4. Creating a Production Budget 55
Estimation Methods 56
Planning the Future in Detail 58
A Sample Manufacturing Budget 61
Manager’s Checklist for Chapter 4 71
v
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vi Contents
5. Planning and Budgeting a Project 72
Define the Project 73
Create the Work Plan 84
Calculate the Cost 89
Tracking a Project 89
Manager’s Checklist for Chapter 5 90
6. Checking It Twice 92
Using a Partner for Proofreading 92
Errors Created by Spreadsheet Programs 93
Automatic Cross-Checking in Spreadsheets 96
Document Version Control 97
Verifying Budgetary Assumptions 100
The Final Proofreading Steps 101
Manager’s Checklist for Chapter 6 101
7. Preparing for Presentation 103
Combining Parts of Your Budget 104
Revising Budgetary Assumptions 107
Creating Templates and Formatting a Budget 109
Adding Account Codes 110
Preparing a Budget Presentation 111
Presentation Formats 117
Manager’s Checklist for Chapter 7 121
8. Budgetary Spending 123
Getting the Budget Authorized 123
Adjusting to the Authorized Amount 126
Setting up Your Budget with Accounting 128
Spending at the Beginning and the End of the Year 133
Manager’s Checklist for Chapter 8 134
9. Tracking Your Budget 136
Authorizing and Tracking Expenses 137
Closing a Budget Period 142
Comparing Estimated Versus Actual Budgets 144
Overspending and Underspending 144
Adjusting the Budget 147
Reviewing Financial Statements 147
Manager’s Checklist for Chapter 9 151
10. Budgeting and Human Resources 153
HR Management and HR Services 154
Use of Consulting Services and Outsourcing 155
Contents vii
Departmental Control 156
Putting It All Together 165
Manager’s Checklist for Chapter 10 166
11. Small Business Money Management 168
Estimating Business Income 170
Small Business Payroll 173
General Financial Management 174
Seasonal Fluctuation and Available Cash 175
Setting Prices 178
Budgets for Customer Proposals 178
Manager’s Checklist for Chapter 11 182
12. Mastering the Budget Process 184
Negotiating for Your Budget 184
Improving Your Estimation Skills 186
Timing Your Budget Preparation 188
The 15-Month Budget 189
Manager’s Checklist for Chapter 12 190
Index 193
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Preface
Iremember the first time I made a budget. I had just started a
new job, my first time as a manager. My boss, the dean of the
school, said, “Sid, we have $50,000 to spend on computer sys-
tems this year. Please prepare a budget.”
Wow! All the exercises in school, all my thinking as I started
the job and wrote out a plan for my work, hadn’t prepared me
for that.$50,000 for my first budget. And it was up to me to
plan it well. If I did, then the computer labs for students would
run well for the year, professors would be able to do research on
their new computers, and—most challenging of all—I would
build a network for the school’s administrative staff. I don’t think
I need to tell you how nervous I was.
This book is written for the young manager I was then, just a
few years out of college with a liberal arts degree. It’s the book I
wish someone had dropped into my hands on that day. It’s also
written for you if you’re working your way up from line supervi-
sor to manager, or if you’re working day and night to make your
small business succeed, or if you’re setting up a new depart-
ment. It will help you if your business is growing, or shrinking,
or launching a new venture. Managing our money well is a key
ingredient for business success.
My first budget succeeded and, three years later, I launched
my own business. Since then, I’ve been training new managers
and consulting for all kinds of businesses. I’ve learned a lot from
my large customers, written books on best practices, and taught
these methods to the new managers and small business execu-
tives who are willing to learn and want to succeed. I hope I can
do the same for you.
ix
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