Friday, May 1, 2020

Revisiting Your 2020 Budget: Thoughts from Fellow Hank Darlington

This virus has changed everything – including how we will be operating our businesses. With fewer customers and reduced revenues - NOW is the time to revisit your annual budget and goals. (Hopefully you have done a budget and goals for 2020). My guess is that the virus has caused your current numbers to be quite different than what you projected way back in November and December.

Even though the future is still pretty uncertain, I would strongly encourage you to reduce your 2020 budget – reflecting year to date numbers and to the best of your ability guesstimating numbers for the balance of the year.

This exercise should tell you if you’ll have to make some adjustments in how the business is operated. In my last article I implored you to not wait to make cuts if that’s what the new picture calls for.

If you had set goals to accompany your 2020 budget numbers, you may have to adjust these as well. Especially if commissions/bonuses are tied to sales/profit performance.

The key to doing it right is to be as realistic as you possibly can be. The new budgets and goals will be your roadmap for the balance of 2020. You could even expand the budget into the first quarter of 2021.

And if during the balance of this year you’re missing your budget numbers by a significant amount, sit down and readjust them again.

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