Next to business, my favorite interest is aviation. Since a young man I have always marveled how such a heavy piece of machine could rise above the earth and maintain flight. I could spend an entire day at an airport and not become bored. No takeoff or landing is the same, and watching the beauty of the earth beneath you as you travel above is extraordinary. As a note, my older brother Gerry and I completed aviation electronic programs #Purdue University—he went on to have a great career putting orbital devices into space while I chose to go the business route. But during my tour, I did lean how such a heavy aircraft gets off the ground and maintains flight.
As time has progressed with aviation, especially commercial aviation, there have been many airplanes manufactured and flown. Enhancements have been made, new models introduced, aircraft configuration have changed to meet demand, and to improve on fuel economy. So where do the older aircraft go when they are longer needed by the airlines? Some are sold or leased to other airlines or companies, but many end up in the desert areas of our country and are moth-balled in what is referred to as an ‘airplane boneyard’—as indicated in the photo above. Some may make it back to active duty, but most are used for parts to keep active models going or for other restoration projects.
Over the course of my career in finance and accounting I have prepared countless budgets and forecasts. Methods and models have come and gone; replaced with new variations and approaches (much like the aircraft mentioned earlier). It has always fascinated me…….okay, I meant to say….it has always frustrated me that the accounting department is the department that creates the budget or forecast. Where’s the sales department in all of this? Shouldn’t they be active in addressing where the sales will be coming from, and from whom? Instead, the guy or gal with the green visor and shirt cuffs takes the prior year’s results or an average for the past three years, and then adds a percentage for growth. Sound too familiar? How does this make sense?
And on top of the process is the disappointment that other than filling a file in a lender’s drawer, the budget or forecast was never used within the operation for which it was intended.
Does your company prepare a formal operating budget? If so, does the preparation include receiving input from the various departments with meaningful data? Speaking from experience, a budget prepared without full cooperation and participation will soon become useless. As an example, it would be very easy to overlook capital expenditures for the upcoming year unless the manufacturing or engineering departments had the opportunity for input; otherwise how would one know?
If you are the company that doesn’t prepare a budget or forecast I might ask why. Is it the process? Do you feel the budget will not serve a purpose? Might it reveal that your current operations are out of control? Or maybe you wish to roll the dice and just take what you get at the end of the cycle?

Why not be wise and responsible and at least set some goals with creating the budget? Having it may keep you on the right track or even reveal other avenues you might wish to take. If I visited your office would I find the room or large credenza filled with old and unused budgets and forecasts? Would I hear someone say—“ya, Bob our former CFO prepared these; not sure why”? Maybe your budget boneyard looks like this.

On the other hand, how confident would you feel if you heard a CEO or CFO say…”we’re excited as we are on target to meet or exceed our budget numbers”? I would have a certain confidence that someone was at the helm in that company.
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Copyright 2018 Clouser On Business
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