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Unformatted text preview: o defend different proposals, and as they do they will
build up their personal commitments and their ownership of budget items and programs. They
will explain why one program is more valuable than another, they will argue about relative value,
and they will increase the level of peer-group commitment. When this process works well, you have a more accurate, more realistic, and more useful budget. You
also have a high level of commitment from your managers, who are now motivated to implement the
budget as well as possible. CHAPTER 13: EXPENSE BUDGET 13.3 As you build your expense budget you are also creating your projected proﬁt and loss. The proﬁt and
loss includes sales, cost of sales, and expenses. With the way business numbers work, your expense
budget will eventually become part of your Proﬁt and Loss table, which we discuss in Chapter 15:
The Bottom Line. If you’re using a personal computer with spreadsheet or business plan software,
you should expect to see automatic linking so the expense budget is absorbed in the Proﬁt and Loss
tables. The illustration below shows a standard proﬁt and loss, with the expense budget showing as
the Expenses portion of the larger statement. STANDARD PROFIT AND LOSS STATEMENT This example is a simple budget that doesn’t divide expenses into categories. This is ideal for
smaller businesses with only a few employees. By the time you have workgroups and a slightly
larger business, however, you’ll probably end up dividing expenses into categories such as sales and
marketing expenses, administrative expenses, and other expenses. We will look at the Proﬁt and Loss
statement in more detail in Chapter 15: The Bottom Line. HURDLE: THE BOOK 13.4 ON BUSINESS PLANNING Budgets and Milestones Work Together
Ideally, every line in a budget is assigned to somebody who is responsible for managing that budget.
In most cases you’ll have groups of budget areas assigned to speciﬁc people, and a budgeting process
that emphasizes commitment and responsibility. You’ll also need to make sure that everybody
involved knows that results will be followed up. The idea...
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- Winter '09