With summer half way over we start the second half of the year looking to finish strong and begin our preparations for the 2014 budget season. Yes, it is that time again! One of the traps we all try to avoid is just taking this year’s budget and adding 5%. Where did that 5% number come from anyway??? During these tough economic times leaders must look for creative ways to produce realistic budgets that deliver income growth and tighten expenses. The question is how do you get managers to take a sober look at their current spending habits? How do you get them to look for creative ways to discover income growth potential?
These questions remind me of the 2nd habit from Dr. Stephen Covey’s book, “7 Habits of Highly Effective People.” The 2nd habit is “Begin with the end in mind.” This next statement may absolutely sound crazy. You have to remind your team that you are in business to make a profit. I know right now you are saying “really???”. Yes really! Managers get tunnel vision. All they see is the task and what they need to purchase to accomplish it. They also get so caught up in renewal and occupancy percentages that they fail to consider income growth potential.
Before you delve into the budget process take the time to communicate to your managers the purpose of your organization. Start with the mission statement. Use this opportunity to help each team member understand how their particular role and department is critical to the financial success of the organization as a whole. This will allow them to escape the tunnel vision from day-to-day operations and gain a new perspective from a 10,000 ft level. This new perspective will help them see creative avenues to reducing expenses and discover potential for income growth. Challenge them to think outside the box on how to deliver upon your mission of delivering a great product or service to your customers while producing income growth to the organization.
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