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Budgeting Essentials

1/2 day
Roxanna Dunn
This introductory class will help you understand the context and purpose of budgeting, and it will teach you techniques to make your budgets accurate, fair, and complete.  You will understand where to start, how to come up with numbers that are relevant - not simply pulled out of the air.  You will be conversant in the terminology of budgeting. And you will see how you can use budget reports and reviews to improve your organization’s performance.

  1. Recognize how budgeting fits into the broader context of corporate and business unit planning. 
    1. Identify the ways in which budgeting facilitates decision-making and control. 
    2. Identify the inputs into the budgeting process and their sources.
    3. Tie the Chart of Accounts (and your budget) to the company’s Income Statement.
    4. Recognize that budgeting is essentially an attempt to mold the following year’s Income Statement.
  2. Determine headcount and salary expenses.
    1. Project headcount requirements for the coming year, creating employee categories: e.g., managers, senior engineers, junior engineers, admin.
    2. Estimate where to apply merit raises, promotions. 
    3. Allow for attrition and replacement.
  3. Use historical cost data to project future expenses.
    1. For all people-driven expenses, normalize historical data to the “engineer-month” and project future needs.
    2. Identify the cost drivers that determine how much will be required in future periods.
  4. Follow budgeting process steps.
    1. Develop a project plan for the budgeting exercise.
    2. Assess your environment for changes that affect your plans.
    3. Gather financial data from Finance and Accounting, Marketing, vendors, your bosses, your employees, your peers and partners.
    4. Research historical spending patterns, future costs.
    5. Document assumptions.
    6. Apply a number of hints to use spreadsheets more effectively.
    7. Recognize how budgeting “games” (sandbagging, padding, spend-it-or-lose-it) are bad for the company overall.
  5. Monitor actual expenses and budget variances, make adjustments, take actions to remedy problems.
    1. Understand the difference between a variance and an adjustment.
    2. Establish limits that, if exceeded, are cause for action.
    3. Learn a number of expense-reduction tactics that can be applied to bring expenses under control.
Very good! Particularly helpful for management, but also useful to know and understand for individual contributors.
  -Cypress Semiconductor, Test Engineer

The concepts were presented in precise methods - easy to digest and absorb. Small group brainstorm sessions were very helpful.
  -Cypress Semiconductor, Manager

This was a great class and very informative with tips on MS-Excel and the overall understanding of budgeting, reading and the income statements.
  -Synopsys, Inc., Supervisor




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