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Time for the 90-Day Scrub!

by Frank Ross on May 20, 2014 · 0 comments

Frank Ross’s post was originally published in Landscape Management magazine. His insights are so valuable, they’re worth sharing from our site. And with his Mid-Year Financial Checkup webinar coming up on June 9, now’s the time to revisit!

The absolute best management planning document on the planet is the Rolling Budget. Managed properly, there is no better management tool ever invented. Ever.

In an earlier article we spoke of the benefits of creating a budget for your year, documenting that budget, spreading it by month and focusing your management team’s energies to achieving those anticipated results. You did that. Right?

Now we are at mid-year and it is time to update our anticipated results for the year with the latest greatest information as to how the year is progressing, and to reevaluate the anticipated results for the remainder of the year. But first, let’s take a look at what this document I refer to as the Rolling Budget looks like.

Breaking Down The Rolling Budget

 

Time for the 90-Day Scrub!At the beginning of the year, we built a budget, spread it by month, laid out all of our benchmarks with which to evaluate our progress as we move through the year. Looking at the report, the first two columns on the left are the original budget. These were the columns we divided up and spread monthly when we initiated the budget at the beginning of the year, These columns will never change. The next two columns are the sum of the months January through December. These columns will change as you change the numbers in the monthly spread to the right.

Starting in January, we will want to enter in the actual data for each month that is completed. Yep, simply write over the budgeted information with the actual information.

The rolling budget columns will change to reflect actual activity so that you can compare the Rolling Budget activity to the Original Budget. Highlight the variances and discuss them with your team. Sweet.

The 90-Day Scrub

Time for the 90-Day Scrub!Now, if you are really on your “A” game, there is one more thing you can do. This is what I call the 90-day scrub. Okay, you have updated the Rolling Budget with actual data. Now, what I want you to do is look forward to the next 90 days and change the budgeted values to better represent how you are performing.

Why would you want to do this? Principally because where ever you are in your year’s activity, you are that much smarter than you were when the budget was created however many months ago. Put those smarts down on paper. It is not so hard either. Figure this: If we just closed May, we are looking at our updated rolling budget numbers and it is the second week of June. If we don’t know how June is performing when we are halfway through the month, something’s wrong. So, update June’s numbers. We also know what the month of July should be as we already have July’s schedule in place. The same can probably be said for August as well.

If you can see variances in revenues or any of the cost categories, change them. Simply write over the budgeted values. Horrors! We are writing over the budget? Changing the goals in mid-stream? You bet we are—if we are changing the numbers, the monthly budgets are outdated anyway. And, remember, we have the first two columns to remind us what we were thinking when we created the original values.

What we want this document to do is to tell us with the most accurate up-to-date information where we are going to end up the year. If it were me, I’d want to know about any changes as quickly as possible, thereby allowing me to make course changes with as much lead time as possible.

Get Everyone On Board

Imagine if you could get your management team’s collective heads around goal setting at this level. Talk about owning the numbers! Talk about accountability! Talk about power! 

Beyond sweet!

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Image credit: Scrubbing

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