Budgeting Season

Survive 2017 Budgeting (Our least favorite season!)

TopDOwnIt is officially fall. Halloween is on it’s way, leaves are changing colors, and you are mentally preparing for the Holiday season. There is one season we are all a little LESS excited for: Budgeting season.

Budgeting season is beginning for professional services organizations. Sales are made, profit is generated and you have to think & plan months in advance based on your history. Making sure your organization’s headcount is in balance with your backlog and projected pipeline is a constant challenge. To over or under staff your organization affects profitability with poor utilizations or project delays. You need the RIGHT TOOL: the one that helps you see far enough into the future to understand staffing needs, the tool that makes you feel ready for the new year.

  • How do you make sure you’re not spending too little on project staffing or too much?
  • Are you wasting time, resources, your hard earned cash by frantically assigning projects?

You have a few options: a top-down approach is driven on market demand. An understanding of the market through historical trending data and/or the sales pipeline to gauge expected revenue is necessary. Then, align your organization’s expenses. The challenge is whether or not the business is structured to capitalize on market demand–a high market demand means you may be losing opportunity if you don’t have the necessary resources aligned internally.

A bottom-up approach is driven on resource supply. It answers questions like “how many hours of work can I bill?,” “how many widgets can I get produced?” and “how much crop will my fields yield?” Estimate potential sales revenue of a product in order to establish the total sales figure.

Your organization’s need is unique based on its industry & market conditions. Comparing both models with ease will give you a competitive advantage. That extra component, the gap analysis, is just what you need to maximize utilization & profitability. Gap analysis allows for a holistic view of the business. Viewing the difference between a top-down and bottom-up can give you actionable intelligence. For example, more market demand means you can safely hire more people, or a constraint on resource supply could determine the possibility of raising prices to increase margins.

We are going to go more in depth in the coming weeks on each component, but for now, please follow our social media pages so you are ready for more info.