At E Squared, we are always looking to take advice from other successful businessmen and women so we can provide our readers with helpful information. So when successful entrepreneur and TV personality James Caan wrote an article for The Guardian we had to share it with you.
As we talked about last week, the planning stage is vital to a successful change phase. Good planning facilitates change and will limit unnecessary expenses. Therefore we move on this week to talk about the benefits of budgeting for change.
Caan emphasises the importance of truthful and realistic budgeting when a company is starting out and facing similar problems to a changing organisation:
“Creating a budgeting process is the way to keep everything on track. You must focus on profits, costs and returns on investment. Additionally, you have to factor in potential market changes, customers and their demands, competition from rival companies, your business objectives and key performance indicators, team management, forecasts and any obstacles you may encounter along the way.”
We totally agree with him here. However as usual we like to have our own say. We believe that there are several ways in which operational optimisation systems can help with budgeting for any type of corporate change.
Firstly, these systems allow the user to map out their company’s processes. This is important when identifying a value stream. The value stream can then be altered and improved upon to maximise profit.
Secondly, optimisation systems encourage the erosion of company silos. This promotes previously segregated departments to work together from one system. Importantly for budgeting, the finance and accounts team can then monitor and control finances with much greater ease – steadying the ship as the a company transforms.
Finally, the installation of an operational optimisation system does not have to be expensive, and could save a business money in the long run. If a pre-existing mapping or management system already exists, then it is possible to transfer a company’s data into the new system via data migration – saving money and time. Moreover, a superior single operating system can replace departmental management systems and therefore reduce software costs.
As James Caan emphasises: planning and budgeting is vital for the success of any business regardless of its current operating status. We simply believe that operational optimisation systems can make life easier when budgeting for change.
The great thing about budgeting is the ability to benchmark performance. Comparing your budget year on year also allows you to implement your key performance indicators if they do, in fact, need revision, as well as comparing figures for growth and projected margins with your market competitors. Remember to always review and revise.