PRIME: Tips to manage your budget

What is the key to managing a successful budget?

November 13, 2013

Our PRIME advisory panel includes some of the remodeling industry’s leading professionals. This month we asked our panel, “What is the key to managing a successful budget?”

Assign expense responsibility
The key to managing a successful budget is to assign line-by-line expense responsibility to the appropriate senior managers. We divide up the separate categories of all our budget expenses to one of our six senior managers. It is their responsibility to keep their expenses within the budget they have signed off and agreed to at the beginning of the year. Variances need to be explained and resolved at our monthly review.
Rob Levin, President
Statewide Remodeling, DFW, TX
 

Take ownership
The first and most important issue to managing our company’s budget is that our executive management team is involved from day one in constructing the budget, so they take ownership from inception. After that, it is a function of weekly and monthly management meetings where metrics are tracked and adjustments are made. But the No. 1 management tool for us is ownership of the numbers.
Nick Cogliani, President
NEWPRO, Woburn, MA
 

Regular review and adjustments
There are three aspects to managing a successful remodeling budget. The first is in the creation of the budget itself. The person responsible for creating the budget has to get buy-in from the key people affected by that area of the budget. Second, timely monitoring and regular review of budget versus actual is critical. It’s the only way to know where you are versus where you want to go. This plays into the third aspect. Because budgets are developed based on at least some assumptions, occasionally adjustments or course corrections are necessary. Together, these three activities provide for successful budget management.
Bill Simone, President
Custom Design & Construction, El Segundo, CA
 

Properly manage
Managing a budget is like managing people. Who, what, when, where, why, and how are important for all to see. Who is the one person specifically responsible for each budget line? What exactly can they do to affect that number? When is the calendar time frame of measurement? Why is this budget line important to the overall business success? How can the one person accountable effectively adjust and respond to changes in the business? Clear and timely financial reporting allows for a strong focus on the tactics that affect a budget line.
Scott Mosby, President
Mosby Building Arts, St. Louis, MO
 

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