I’m starting to prepare my companies for their 2016 budget.
If you’re a single entity startup this may sound early…but if you’re a multi-branch, multi-country entity you will need to consolidate each individual budget into a global budget.
As the CFO, I’ll work alongside the country managers and division heads at HQ to coach and help them produce their budget in a timely manner.
I will then consolidate these budgets into the company’s global budget and review all assumptions with the CEO, who must give the final nod of approval.
This process is orchestrated to meet the final deadline – the last board meeting of the year in December where the board of directors will approve or reject the budget.
The CEO, CFO…the C-suite…and the board of directors decide the budget
As the CFO, I will spend the next couple of months determining how much money each country and division is allowed to spend next year. They are all constrained by their individual budget.
The C-suite, however, is not strictly constrained by a budget. They created it and have the authority to change it as they see fit, within certain boundaries of course.
If you’re an outside vendor would you want to work with individuals that are constrained by how much money they can spend?
Are you consistently trying to find out which bucket of money in which department hasn’t been depleted yet?
Imagine the center of a room…
Now, think through the process of how you determined where the center of the room was?
You probably thought of a room you know, like the one you’re sitting in, or your living room or kitchen at home, and then did some geometry based on the lines created by the walls of the room to find the center.
The point is you found the center of the room by starting from a set of boundaries, that is the lines made from the walls.
It’s therefore not surprising that so many people start to figure out how they can make money by looking at the constraints they face.
Budgets are a way to limit resources and prohibit people from overspending. It’s a boundary to you being paid more.
So instead of trying to break through boundaries, bypass them…
Become an authority in your field.
Yes, degrees and/or certificates are important, as many times that will get your foot in the door. But we’re a culture that overvalues degrees and knowledge. There’s a declining value to each new degree earned and ultimately it’s not what get’s you that outsized payday.
Isn’t it true that the people, who make the most money, solve the biggest problems?
And the people who spend the most money have the biggest problems.
As a consultant or vendor, if you focus on boundaries and budgets, you’ll end up talking to HR and they have no extra money to spend. Whatever your contract states that’s your payment…1X only
HR will ask you to deliver a program, a research paper, a workshop, etc.
But…if you think in terms of outcomes
…And are able to draw from your extensive experience and take an industry wide view to understand where it is going and what pains will show up in the future…
…So you can position your client to advance her market position
…Then you’ll be talking to the C-Suite…and that’s where the money is…3-5X and more.
Outcomes = C-Level = 3-5X
Budgets = HR-level = 1X
Sell to solve problems, not to deliver your product.
Whatever stage you’re at in business, you need to be all over the numbers. In posts like this, we aim to offer bite-size food for thought – but in a few hundred words, we can only do so much.
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