Page 75 - Budgeting for Managers

Budgeting for Managers
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need to make sure that the general changes apply to these spe-
cific items from your vendors and see if you can cut a better
deal. Second, you need to consider if you’ll change the quantity
of an item that you’re buying.
Some percentage increases are the result of contracts or
policies, such as annual raises, or the results of a specific ven-
dor announcing a price increase. These are good to use, but
you should be sure that no other changes, such as a change in
staffing levels, will alter the line item.
Some items, such as sales tax and interest pay-
ments, are calculated as
Making Sense percentages. If these rates
of Percents
change, adjust the appro-
The smart manager uses
priate line items in your
percentage changes, but always checks
budget to match.
two things for each line item:
Some managers use
• Does the percentage change apply
to this line item? percentage increases as a
• Are there any other changes that quick way to create an
would also change this line item? estimate. We don’t recom-
The smart manager does not use mend this, because this is
percentage increases across line items getting numbers from
as a quick way of making an estimate.
numbers, not from reality.
Planning the Future in Detail
Let’s take a closer look at the methods for estimating line items
that we used in Chapter 1. Start with the largest item on your
estimation form and work down until only small ones are left.
For each one, decide which method or methods to use in plan-
ning the budget for that line item. Here is a list of methods in
the order it’s best to follow:

1. Think about how your department will work this year and
make a list of any changes. Then ask if each change will
affect each line item and adjust those items that will change.
2. Consider purchases and leases. If you pay for an item on a
contract, you should determine if those contracts continue