Search

Surviving the budgeting game If you do an annual marketing budget, you may feel at times that you have to be clairvoyant, especially when you are estimating 12 months of [...]

UK tax leasing in the shipping market has boomed, with a record volume of transactions being done in recent months, according to market sources. Since the March Budget ignored many [...]

The annual budget is an important element of property management. It consists of three budgets: an operating budget, a capital improvements budget, and a tenants improvements budget. An accurate annual budget determines both probable revenues and probable expenditures that are likely to be incurred in the coming year. It should be based on a concrete plan for operating the property, using well-supported projections for costs and revenues. Answering questions such as how much income will be received and what debt services need to be paid will help in making accurate predictions. A properly done budget can be an on-going management tool used throughout the year.

Budgeting techniques are discussed as methods for controlling fixed and variable costs, and direct and indirect expenses. The classification of expenses as either controllable or uncontrollable is also explained. Methods for determining each operating unit's profit contribution are identified and analyzed.

The Promotion Marketing Association of America (PMAA) reports that 1986-1987 expenditures for sales promotion will exceed $100 billion. Sales promotion expenditures have increased by an average of 12 percent per year and, since 1974, have surpassed advertising expenditures every year. Sales promotion expenses amounted to $94.5 billion in 1985, compared to advertising expenses of $54.8 billion in the same year. Most promotional expenses relate to meetings and conventions, accounting for 31 percent of 1985's promotion expenditures. A report by Donnelley Marketing supports the findings of the PMAA by noting that media expenses related to advertising are accounting for increasingly smaller portions of companies' total promotional budgets. The Donnelley report also notes that couponing promotions have plateaued but will continue. Other highlights from the PMAA and Donnelley reports are discussed.

A survey of 402 firms in nine industry categories indicates that successful firms: (1) encourage company-wide commitment to budgets, (2) identify connections between immediate, medium-term, and long-range budgetary objectives, (3) develop detailed procedures for budget preparation, and (4) analyze variances in the budget and correct them. The survey, sponsored by the National Association of Accountants, was conducted among firms categorized as successful according to price-to-earnings ratios, self-identified financial performance, self-identified budgetary effectiveness, and average returns on equity for the past five years. In addition to discussions of the four budget-related qualities the survey identified, ten steps to more effective budgeting are discussed: (1) commitment by senior management to the budgeting process, (2) establishment of realistic budgetary goals, (3) assignment of budgetary objectives within managers' responsibility ranges, (4) assessment of senior management's goals prior to preparing departmental budgets, (5) identification of how short-term objectives help to achieve long-range goals, (6) treatment of the budgeting process as a major company project, (7) standardization of the routine aspects of the budgeting process, (8) regular reviews of actual operating results in comparison to budget, (9) discipline of mid-level managers who play 'budget games,' and (10) periodic auditing of the budgeting process.

The shipping industry may take advantage of low interest rates and adequate money supply to avail of business financing schemes. There is however, caution from the banking industry that too many loans may increase the capacity of the shipping industry resulting in the inability of shippers to service their loans. Banks however, are taking steps to ensure that they finance only shippers with impressive portfolios to minimize risks.

Companies are abolishing budgets and finding new, better ways of managing. It is widely recognised that the annual budgeting cycle adds little value and takes too much management time. It [...]

Surveys conducted by Market Facts Inc (Chicago) indicate that corporate expenditures for marketing research will increase. The research showed that three of every five corporate managers responsible for marketing research at consumer goods and service companies will increase their 1987 budgets over last year's budgets by five percent, on average. Similarly, 69 percent of grocery and drug firms indicated planned increases in marketing research budgets. Types of research corporate managers plan to increase include: telephone surveys, focus group surveys, shopping mall intercept surveys, mail surveys, laboratory testing, new product research, and test-market research.

PC Support Budgets Lag in 1989 In 1989, many companies will bring new PCs in the door faster than they bring in the people to support them. And as the […]

Budgeting for the supervisor How far down in the organization should the budgeting process go? That depends on the answer to the question 'how important is it to meet the [...]

Too often, capital budgeting emphasizes short-term paybacks that cause rejection of good capital investments. The process of capital budgeting is analyzed. The seven steps of the capital budgeting process are: (1) establishing investment objectives, (2) identifying possible investments, (3) analyzing the alternatives, (4) developing the budget, (5) approving investments to be made, (6) implementing the plan, and (7) auditing the post-implementation results of the capital budget. Capital budgeting should be considered in terms of the company's long-term planning and goals, if the budgets are to be effective.