Save content
Have you found this content useful? Use the button above to save it to your profile.

It's good to talk

24th Oct 2014
Save content
Have you found this content useful? Use the button above to save it to your profile.

CP and BD were not happy with each other over changes to the budget for our proposed increase.

I was go-between for their discussions and that wasn’t achieving anything, so I decided it was time to try a different approach.

I called a meeting for the three of us, with just one item on the agenda: the impact the proposed price increase will have on our budgeted new customer numbers and customer revenue.

Discussion was initially amiable with both of them saying they wanted to find a way to resolve this and move forward.

But when it came down to the nuts and bolts, neither of them wanted to give in.

BD insisted that 5% was too low a figure for partners who wouldn’t want to buy our software any more at the new price.  “Their margins are tight.  They won’t be able to afford it.”

“We have a good product and they should pay for it,” insisted CP.  “I don’t think they will refuse to buy it at the new price.”

He asked me if I intended to take an optimistic, realistic, or pessimistic view in the budget plan, which is an interesting point.  An optimistic budget plan gives the staff stretch targets to aim at, but too optimistic and you risk morale falling.  A pessimistic budget plan helps give a warning of when you might run out of cash, but too pessimistic and the staff could achieve target too easily.  Realistic is best, but nobody can predict the future with any degree of accuracy.

“Let’s have two plans, a pessimistic one and an optimistic one,” was CP’s final decision.  “5% for one and 10% for the other.”

Great, now I have double the number of budget plans to maintain and report against.

“I don’t like being called pessimistic,” BD muttered to me in the car park that evening.

I don’t think this issue is fully resolved yet, and maybe it won’t be until we see whether the drop-off is nearer to 5% or 10%.

Tags:

You might also be interested in

Replies (1)

Please login or register to join the discussion.

Routemaster image
By tom123
29th Oct 2014 17:06

I always thought you had three budgets:

1) a bit pessimistic - to be shown to the bank and then beaten.

2) very optimistic - to be shown to the sales team / motivation / commission etc.

3) Realistic - what you expect to happen - not for circulation outside the finance dept.

 

( a bit tongue in cheek, but somewhere near reality)

Thanks (0)