For this interview, I interviewed my grandpa, John Linton. He is the founder and former CEO of the School Improvement Network. His career has consisted of producing and developing professional development trainings for teachers and educators. He was a teacher before founding the SINET in 1991.
What are some of the most common areas in which your company goes over budget?
“The biggest was wages/salaries. Travel, sales expenses, software development, computer programming.”
What have you noticed works most effectively in cutting costs of these problem areas?
“Accountability return and report. clear lanes of responsibility.”
Have you ever had to lay people off as a result of consistently going over budget?
“Yes. We did everything we could to prevent it but sometimes the realities of money we could not fight. We had to keep the business open unfortunately at the expense of letting some staff go. We ran into the problem of our projections being too large and so we planned for that and then would not hit those goals and find ourselves with not enough money to pay the bills and had to lay some people off as result.”
Do you find it beneficial to keep employees aware of budgeting concerns?
“Yes, it is absolutely critical. They have to understand where we are at and where we are trying to go. By keeping employees in the loop they could understand why cuts had to be made or if people wouldn’t get bonuses in a particular year.”
Are there certain categories of your budget that seem to be unpredictable? (patterns of being over than under budget?)
“Revenue projections in sales. If you don’t meet them, it leads to other problems where we had to cut back.”
Would you see it beneficial to provide a cost breakdown of over budget areas?
“Yes. You can’t solve the problem if you do not what caused it exactly.”
How often do you spend time looking over the budget?
“Once a month. But the accounting department looks over it every day. One of the weaknesses that we have had, that we are working towards improving, but I don’t think we have looked over the budget enough. When you are so busy, it unfortunately seems to slip through the cracks on a daily basis and seem to only look at it at the end of the month. Budgeting is one of the last things that people want to spend their time on so sometimes it is put off.”
Do you include staff or other leaders in budget discussions?
“It depends. If it is the whole office, they need to understand budget concerns and the big picture. But, each department needs to go over in detail their budgets and give feedback back up the chain.”
What tools or programs do you use to stay on budget?
“Accounting applications. Strict accountability and reporting. One app that we use is YNAB, You Need A Budget. It’s a program that budgets every dollar that you have. Each dollar can be put in different categories and if you go over in one category, you have to pull dollars from another. We have found it to be very helpful.”
What concerns you more, keeping the month to month budget or the year to date budget?
“Month to month budget because by the time you calibrate the year to date budget, it is too late. You have to stay on top of the budget throughout the year otherwise you will get too behind.”
What has been your greatest success in keeping budget? What is a time when you erred in keeping budget?
“I can’t recall a specific example but when we involve all of the department heads involved and communicating regularly with accounting we have met or been able to go over budget less. We are trying to reign in our revenue projections so that they are more accurate. The biggest error that we made was in our revenue projection we were way off and ended up having to lay off 40 people in one day. It was one of the worst days of my career.”
This interview taught about the importance of monitoring and keeping budgeting on a daily basis. To me, in the past budgeting has seemed to be something someone else worries about. But the budget is something that everyone should worry about. If staff is included on big picture budget issues, then they can help make choices and have a greater understanding when cuts have to be made. Everybody has a part to play when it comes sticking to budget and helping to keep the budget. As a manager, you have the responsibility to communicate that with everyone.