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Unformatted text preview: a Policy Statement Managing Budgets How much money is dedicated to customer support and assistance? Would I want to be a customer of this organization based on what I see? 2.4 Organizational Direction The budget document can also give you information on where the organization is heading – or at least where they hope to be heading. It does so by telling you where they are investing their money. Are they: Creating a new intitiative? What kind? Launching a new product? Entering a new market segment? Expanding? Consolidating? Investing in higher technology? If you can determine where an organization is investing its resources, you can learn a lot about what is important to its leadership. 2.5 Debt and Debt Servicing Like in your own personal budget, the amount of debt that is listed in an organization’s budget will tell you about the decisions the organization has made in the past. You may also be able to glean from the amount of debt what strain that debt is placing on the organization’s health. For example: Are they paying more in debt than they are making in revenue? What was the debt taken on for? Does the investment seem to be paying off? How much of the organization’s resources are not going to debt payments, and for how much longer? Download free ebooks at 13 The Budget as a Policy Statement Managing Budgets What does this tell you about the organization’s decision-making in the past? It has been said that the best prediction of future behavior is past behavior. So if the organization has a habit of operating while in significant debt, what does that say about how they might operate in the future? 2.6 Where the Organization Might Be Weakest Since the organization’s budget provides you with insight into where it has placed its priorities, that knowledge can also help you to understand where the organization might have problems reaching its objectives. If you have ever been in the position of having your budget cut, then you have experienced what it’s like to struggle to meet your objectives. So, what does the budget tell you about where the organization might have weakne...
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