Own Your Budget – Can you explain your budget variance?

John was sitting in a meeting when the financials were projected onto the big screen. As the numbers were presented, he slowly sank into his chair.

Even though he was surrounded by his peers. He felt alone.

John didn’t understand financial data. But he didn’t ask because he didn’t want to lose face in front of his peers.

Research by the Harvard Business Review shows that John is not alone. The majority of managers and front line supervisors respond the same way when they don’t understand financial data. They don’t ask.

Have you found yourself in a similar situation to John?

You may have been sitting down one on one with your organisation’s Finance / Business Manager. Reviewing the budget numbers for the month.

You may have received your latest budget report via email from the Finance Department. Followed by the question that many budget owners dread:

Can you send through some commentary that explains the variance to budget for the month?

You can’t investigate because you don’t understand your budget.

“What did we say last month?”

You use the commentary from last month so as to keep the Finance department off your back.

Has a program or project been delayed?

What has changed since the budget was approved? Do we have any control over what’s changed?

Did we achieve what we set out to do?

Could we have done better?

There is a cost of not being able to answer these questions as a budget owner.

The work involved in explaining budget variances is an opportunity to understand your budget. The more you understand, the more you take ownership.

Own your budget so it doesn’t own you.

PS: Are you ready to start understanding your budget? Let’s have a chat

One sporting stat

A couple of weeks ago, the Kansas City Chiefs beat the San Francisco 49ers in the Superbowl. The American equivalent of the AFL Grand Final. The Halftime show at the Superbowl is an event on its own, with Apple Music paying $AUD 70 million to sponsor the show every year.

Usher performed at this year’s show. For free. It’s hard to say no to performing in front of 115 million people for 13 minutes. But if you wanted to advertise your brand on a 30 second TV commercial during the Halftime show it cost $AUD 10 million.