When Money is an Issue

The textbooks in business school spend a lot of time talking about how to develop a budget, and how to manage a budget. Even in our home lives we use a budget to manage our expenses. But what happens when we walk into a new position and there is no budget?

The Shortest Routes to Cash

We know we need cash, now where do we find it? And where can we find it fast?

Controlling Expenses

Keeping control of spending.

Are these numbers for real?

OK, they gave you some numbers, but what is the real story behind those numbers? Will they be the same numbers tomorrow as they are today, and is there any truth to the rumors about them?

Who Owns What and How Much?

Sometimes it's better to own a little bit of something than a whole lot of nothing. Of course a little bit of something can be a real big problem as well.

The textbooks in business school spend a lot of time talking about how to develop a budget, and how to manage a budget. Even in our home lives we use a budget to manage our expenses. But what happens when we walk into a new position and there is no budget?

The first thing we want to do is to visit the CFO and confirm that there isn't really a budget somewhere that you can get a copy of. This can be a challenge though as some CFO's don't want to share bad news (or their inability to budget) with anyone. For example, I was CTO in one company where it took six months before I ever saw a budget from the CFO, and that was to show the CEO that I was $600,000 over budget. Not only did I feel stabbed in the back, but it took me two days to show that I was really $150,000 under the budget, with many of the expenses either belonging to other departments, or not accounted for correctly.

Hiding issues is not the only reason why there may be no budget. I've seen other companies where the budget process is a matter of the money going to the first person who comes into the CFO's (or CEO's) office and asks for it after revenue comes in. These companies have no real priorities, nor do they tend to meet all of their obligations on a timely basis (pay checks for example). Fortunately, some of these companies have enough revenue arriving that they can survive while a real budget process is put into place. This kind of on-demand budget has also been common in well-funded start-ups. Unfortunately, while it is fun at the beginning, it doesn't build any fiscal discipline for once the cash begins to run short.

Some companies plan their budgets at the corporate level, but then never pass the requirement down to the individual departments. As a result, the entire department budget may never be anything more than a single figure. While not optimal, this isn't entirely bad as at least there is a basis to work with.

More challenging is the budget for a department within a company where the budget is contained within the budgets of other departments, or within a matrix structure, such as a product based strategy, but then never broken out. In this case the mythical budget figure is not held closely by a single person, but rather in pieces by a whole group of people. Prying out the individual pieces can become tricky, especially as the holders of the pieces are often unwilling to commit to specific figures.

Cash is King!
Cash is King!

We've heard the expression before, but in the context of the dysfunctional organization this is doubly true.

Cash gives us time to fix things. No money, no paychecks, no people, no work done. It's that simple. We can also buy time with banks, suppliers and creditors.

A short term view of cash is important to the long term goals of survival.