Book available online or at your local bookstore. Temeko Richardson

Management 200 - Budgeting

Whether budgeting in a corporate setting or your own business, the principles are similar - allocate money to pay for human resources, overhead, and a differential for the unknown or expected.   

Here is how you budget successfully and not get caught offguard:
-  While allocating money for human resources may be different based on how dollars are distributed (ie project-specific or capital planning), there should be more than enough money to satisfy payment obligations for employees and contractors.  Plan appropriately so that if 50% of your budget is cut or a project or capital planning  initiative is not approved, there are still a surplus of personnel.  Overstaffing and having to let people go decreases employee morale more than work overload. 
-  There will be expenses that are required to keep the department running or the business operating.  These can include staff meetings, personnel development, supplies, travel costs, technology hardware and software.  For entrepreneurs, this also includes taxes, telephone, leases, and  Internet usage. Tally these known expenses and make sure there is a way to cover them based on the rates charged for personnel on projects - both profit-centric and capital.
-  The unknown is just that but it has a price too.  Just like building a new house, it is best practice to allocate at least 10-20% more for the unexpected. You never know when there are more meetings than there is actual work because of a corporate initiative. You never know how late the vendors will pay, especially in a fickle economy. Brace yourself and plan accordingly. 
If you stick to these principles, you are least likely to be blindsided by budget issues that have your management doubting your skills or scrambling to keep a business open. Remember, failing to plan is the same as planning to fail.

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