Reading time: 3 – 5 minutes“There is nothing quite as wonderful as money There is nothing quite as beautiful as cash Some people say it’s folly But I would rather have the lolly With money you can make a splash”
“The Monty Song” Monty Python
This is the 10th post in the series on Strategic Planning. Note that you can subscribe to the blog postings by completing the form in the “Subscribe Free” tab. Or, you can link with an RSS feed.
Isn’t this true. “There is nothing quite as wonderful as money.” Maybe I should qualify that and say….there is nothing quite as wonderful as enough money to get the job done. And, if your experience in business is like mine…it seems like there is never enough. That brings us back to the focal point of Strategic Planning. With good planning, you focus your financial resources on the most important activities of your company or your area of responsibility within the company.
You can now transfer your strategies and tactics to a spreadsheet. The first column of the spreadsheet (column A) will be the listing of strategies and tactics. The columns to the right will be the months of the year. Now you can plug in the costs of the various tactics into the month(s) they will be executed. Total the columns and you have the monthly costs of the strategic plan. Total the rows and the final column and you have the annual cost.
One could argue that you can take these tactical expenses and put them into the line-by-line chart of accounts in the company wide budget. This is true. Eventually, that is where these expenditures should go. No doubt you have a budget line for trade show expenses. And, several budget lines related to advertising. However, if you jump right to this, you will lose the big picture.
By seeing the budget from the standpoint of Strategies and Tactics, you can make tactical financial decisions. If, for example, the budget seems to high, you can look for a specific tactical area to eliminate to reduce expenses. It is easier to locate and agree on a low priority tactic that can be cut. Perhaps it is a series of exhibits at tradeshows in a secondary market. When the Strategic Plan was originally written, everyone agreed that this secondary market would be good to explore for additional revenues. However, when costs were associated with the plan, it became obvious that this year it would be too expensive to explore the secondary market.
In earlier posts about strategic planning I made the point that a strategic plan is a dynamic tool. We just used the example of eliminating a tactical area to bring the budget into line. At the same time, if in the first quarter or two of plan execution, your team is overachieving revenue goals, you could decide to re-instate this strategy and its tactics.“I know money is the root of all evil Do funny things to some people Give me a nickel, brother can you spare a dime Money can drive some people out of their minds”
“For the Love of Money” The O’Jays
My hope is that good strategic planning tied with a budget that is related to real tactics will prevent the money from driving you out of your mind.