Keep These Things in MindWhen Going into Budget Season
Ever heard the term, ‘eating your frogs’? It’s when you’re tasked with something that you kind of dread. It’s usually tough to tackle, or something you're not so confident in doing, and it always is the thing that seems to stay on your list the longest. For many of us, that frog's day has come, and now it’s time to take the leap and begin the 2021 budget process for our businesses. Now, this may not have always been your frog, but due to all the unknowns with the pandemic and world-swirl to follow – here we all are – in a pit of frogs, together.
2020 has certainly been anything but typical and most company budgets were tossed out the window... so what will 2021 look like?
We’ve been thinking about this topic a lot and have had countless conversations with clients and peers, and here are a few operational considerations we wanted to pass along as you tackle the budget frog for 2021:
Many companies use the current year’s budget as their baseline for creating the next year, but we all know our 2020 budgets haven’t been accurate. Would using 2019 as your baseline given the volatility of 2020 be a more accurate option? What would be the impact if another big wave of the pandemic forces a shutdown of the economy again – or severely hampers its recovery – and how will you be prepared?
Do revenue projections need to be rethought and perhaps based on more conservative numbers? Do all budgets going forward need an offsetting “risk” factor to normal revenue projections?
How about corporate expenses? Some companies have experienced decreased costs with people working from home and incurring less ‘office’ related expenses. What is the projection for how long your teams may be working under alternative circumstances....and are these new work from home protocols going to be a long-term solution for your firm?
In regard to building owners, less occupancy means decreased expenses such as janitorial and maintenance. Yet as employees head back to their work environments, the costs around janitorial and cleaning is likely going to rise beyond what existed before, as the expectation to keep spaces as germ-free as possible becomes the new norm. What percentage of your tenants do you expect back, and when? How does this affect your budgeted expenses for 2021?
We’d also suggest that within the next few days, you identify a timeline to work through this process and set a targeted completion date. We love our S.M.A.R.T. Goals for a reason – because when you do this, research shows you're more likely to act and do it well – and we want you to do it well!
So, go, go, go, and budget until your heart (and stakeholders) are content! As you consider the operational aspects of your budget process, know that Finch & Daisy stands ready to support you with the systems side of the process – be that training or review of your current budgeting platform. And if you’d like a second pair of eyes on it, we are happy to help and share any insights or feedback. We’re currently helping clients prepare for their budget season by enhancing system capabilities, training their teams, and leveraging technology to its fullest. During times like these, rallying and reaching out to the experts in your circle, not only provides insight, but also the strength and confidence needed to be successful and mindful of the coming year.