Dear Reader,

Its budget time again. I’ve been watching mid-market business go through some sort of “capital spending budgeting” process for 25 years.  My impression suggests mid-market companies approach the capital budget planning process in several distinct ways:

§         Entrepreneurial business – usually no real budget process. Owners make decisions, often based on single source decision makers who starts the process and assigns a middle manager project lead responsibilities.

§         Moving towards “professionally managed” corporate model - most often some budget process in place although a wide continuum of actual practice runs the gamut from budget is largely ignored to day-to-day management by objective/Open Book Scorecard practices. Most often a group decision is required with consensus at least amongst the executive management team.

§         Formalized Board of Directors budget process - consumes executive and middle manager time and is a pre-requisite to getting resources allocated for any change. Sarbanes Oxley regulations are becoming very prevalent in these types of organizations with formalized audit processes and mucho wasted energy.

The reasons for these distinct categories is not difficult to figure out – formal budget processes involve lot’s of time, energy and management resource, smaller and entrepreneurial run businesses do not have an appetite to make this a priority.

I think budgeting is something that is more of a Catch-22 type dilemma, than a problem that can be solved. Especially in today’s world, where the ability to forecast and predict is difficult.  The dilemma is this…

If you don’t plan and budget intelligently you will begin to be pulled into a “negative” cash flow patterns. This causes cost cutting measures to be forced upon the organization, which (because it was not accomplished intelligently) creates customer and employee satisfaction problems (both are often related!). Channel partners also are motivated to switch alliances as problems grow. The “effects” of these things continue to diminish the top line and the cycle continues. I’m sure you’ve seen this happen in firms you have come in contact with. Most business failures are the final “effect” in this cycle. Not a good thing.

The other extreme is very difficult to accomplish effectively. Especially in lean & mean businesses – executive and middle management are always stretched thin. No time to handle truly effective Strategic planning and driving into budgets and capital project plans. Larger firms, especially Public ones, have regulations and Sarbanes type budget considerations that eat up scarce resources. People burn out will happen so - planning is often compromised.

For planning to be successful in today’s stretched and stressed business environment techniques should be used to focus efforts on developing “good enough” plans – gaining consensus along the way and involving those key people who will be sponsors, project management and critical resources to implement whatever it is you are planning to accomplish.  Managing time is the most critical factor and scarcest resource!

Regardless of the nature of your firms budgeting process making the plans happen on time and budget is the realm of what Rainmakers is all about.

We can help your firm by delivering these two key services:

Find A Resource™ When you have a need to locate a specific resource or product that can help solve critical problems or take advantage of important opportunities.  Rainmakers uses a Consortium of over 30 strategic partners to meet the needs of our clients. We specialize in working with mid-market (read lean & mean) complex, manufacturing, distribution and other high growth firms. (Click on name above for details)

The Balanced Approach to project planning  Designed from best practices in project management and drawn from our proven Balanced Approach model, Rainmakers offers Project Launch Sessions to help executives, managers and teams successfully anticipate and organize projects. (Click on link in name for details)

This issue of Rainmakers quarterly SMOKE SIGNAL contains many useful ideas for businesses to help it prosper in today’s hyper-competitive environment. Thanks for your time and feel free to let me know how we can help.

Jon C. Liberman

Rainmakers

847/251-3327

jon@rainmkrs.com
www.rainmakers.us