Effective Budgeting and Planning Are Necessary Business Leadership Skills

Maybe you have already completed yourbudget and plan for 2011. If so, congratulations! Less than 30% of all businesses, especially small businesses, actually go through a formal planning process. I believe that planning (and yes, even budgeting) are necessary business leadership skills to develop, whether you are a business owner or hold a key leadership position in a firm. I learned about planning early in my career.

I worked for a food manufacturing firm as manager of Quality Control. The owner of the company believed that every department should write a plan. When I left that industry and went into sales, the new company believed strongly in planning. Every single sales person was required to write a yearly plan and review it with the manager. It was an intense process that included what I was going to do, how I was going to accomplish it and what resources I needed to make it happen. Those skills served me well when I opened my first company.

I can’t stress enough the importance of the business leadership skill of planning. If we simply say ‘I want 20% growth’ without knowing (a) is that growth in revenue or profits?; (b) is it in one area or across the board?; (c) how are we going to make it happen?; (d) what might interfere with our reaching that goal?; (e) what resources will be needed, etc., etc.?, then we have to depend on luck. If we do get lucky, we have no way of knowing how it happened and how to replicate the results. I’ve done annual business plans for 30 years. Not every goal was reached, and sometimes the goals changed as new opportunities presented themselves. But one thing I know for sure: Over the years my companies have succeeded, not simply because of hard work on my part but because I developed the business leadership skills of planning and budgeting. If you have yet to write a plan for 2011, now might be the time to get started.

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