Many skills are important in business management, but the one that can spell success or failure is budget management. Business experts like Eyal Gutentag list the ability to work within a budget as one of the most important skills for managers and entrepreneurs.
By the Numbers
One of the difficulties for business managers, especially if they have moved into the position recently, is that each business has its own way of operating. Although there are basic principles that anyone with a business degree should be aware of, how these are put into practice can vary widely from firm to firm. One thing is absolutely certain, however; you must stick to the budget. If not, costs could quickly escalate and that leads to unhappy clients.
Developing a Budget
Unless it is a very small company, the manager usually receives a budget from the Chief Financial Officer (CFO) or the accounting department. They develop the budget by tracking spending over time and usually use budgeting software that produces a spreadsheet. A manager needs to pay attention to the monthly limits to be sure not to go over budget.
Not as Simple as it Sounds
There are many factors that can affect a budget, however, so it may not be as simple as it appears. Employees move from company to company, and if someone has been hired or left for another firm, this can affect the budget. It takes time to bring new people up to speed with a project, and that can cause cost overruns. Changing costs over time or equipment failures also mean budgets need to be revised. A successful business manager must pay attention to all of these variables.
Being able to follow a budget is a crucial skill for business managers. Whether you work for a large firm or have a sole proprietorship, It can really make or break your business.