November 5: The Future Budget
The budget for the future remains stable throughout good times and bad.
In most enterprises there is only one budget, and it is adjusted to the business cycle. In good times expenditures are increases across the board. In bad times expenditures are cut across the board.
The change leader's first budget is an operating budget that shows operating and capital outlays to maintain the present business.
What is the minimum we need to keep the operations going? In poor times it should, indeed, be adjusted downward.
The change leader has a second, separate budget for the future. The approach is 'What is the maximum funding these new activities require to produce optimal results." That amount should be maintained in good times or bad - unless times are so catastrophic that maintaining expenditures threatens the survival of the enterprise.
Action Plan: Prepare a 'development budget' that contains funds to exploit opportunities.
Make sure the budget provides stability of funding in good times and bad.
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