By The Brand Guy
Budgeting and planning can be a trying time amidst the notional creativity of a communication agency or department, especially if it goes awry.
Not so long ago, I worked for an empowered princeling, lacking in energy and ambition. He came in one day most upset because of a massive departmental budget cut due to his lack of approval for planned and budgeted jobs.
His contention was we should have warned him. My take on the matter was that he was double dipping, scoring lazy time on jobs that he should have approved while trying to boost his KPIs with savings.
Fortunately, his behaviour was obvious, so after a couple of painstaking activity budgets, in later iterations, we just replicated the budget with annual increments.
Hovering around that mess, there is a lot to learn.
There is no point in thumb-sucking a budget. It must be based on planned, scheduled activities. If the activities aren’t approved and carried out, nothing leads to nothing. If you plan and schedule the work, try your level best to do the work. At least you will have minimal communication. The corollary to this is to plan for the minimum requirements.
Opportunities, changing environments (read crises) and innovation are flies in the ointment. No environment is static, especially in the field of communication.
Under changing circumstances, with a fixed budget, you will either have to forgo an activity or delay the activity until the next budget period. The exception to this is a hugely profitable activity that appears near certain, though even that is not without risks.
Conventional wisdom says budget for contingency. There is no predictability, and it may vary from opportunity to opportunity, but my gut feel is to allow a minimum of 5% on the conservative side. The alternatives are to sacrifice the opportunity until the next period in which case the gains of early adoption may be lost, or to cut elsewhere at the risk of losing the minimum set of activities.
Contingency alone is a risk however, representing a sacrifice of resources elsewhere. One approach is to scale the contingency according to the remaining period, but this is far from ideal as the quotes for opportunities will not scale according to remaining months of the year.
Another is to aggregate the cost of contingency across the enterprise, only draw as needed and account for it as some form of windfall in the coming period.
Even if the contingency is available on paper, there is no guarantee that it will be available when it is needed, so try not to rely on it.
In enterprises with robust financial management and highly developed procurement systems, the most important idea is to bring your financial and procurement functions into the loop and get buy-in. The goals of the communication department or agency should be clearly understood. So too must the objectives of each of the activities, planned or unplanned.
The financial function must be your most enthusiastic supporter. They have the most to gain (on paper) from your activities. They have the most power to understand and forgive in coming budgetary periods. In fact, monthly meetings make sense to keep them in the loop.
Procurement may be a little bit more difficult, so work as far in advance as possible.
If you have a plan, spend as close as possible to the limit. Less is not more, nor worthy of a KPI. If you have underspend, beef up activities elsewhere to make up the underspend.
*Pierre Mare has contributed to development of several of Namibia’s most successful brands. He believes that analytic management techniques beat unreasoned inspiration any day. He is a fearless adventurer who once made Christmas dinner for a Moslem, a Catholic and a Jew. Reach him at contact@pressoffice7.com if you need thought-leadership, strategy and support.
