If your current budget is rather “old school”, it wouldn’t surprise me if many of your customers don’t see much value in it. It’s tough to optimize customer value based on no appreciation. Zero doubled is still zero.
So you may have to dig to find your customers that are using the budget appropriately, or you may have to put yourself into their shoes to imagine the untapped potential the budget might represent.
I’ll admit to imposing some of my own opinions onto what I think my customers need for value. The biggest mistake I see my customers make (oblivious to their error) is that they judge their financial performance based on their published budget – completely without regard to changes in business volume.
For example, they pat themselves on the back for beating their salary budget by $10,000. They fail to recognize that they only beat their budget by 2%, yet their volume for the period was off by 10%.
This gets me to my overarching theme: budget and track the ratio.
Budgeting the resulting dollars, creating budget income statements and tracking dollar variances, is meaningful to the accountants who developed the budget models, but it has too many subtleties that are lost on the average department manager.
What subtleties (and sources of error)? More on that….