#Annual#Budget

In the times we live the Commercial Process is subject to enormous pressures. Industrial companies that perform an Annual Budget know exactly what I'm talking about. When September arrives (for companies whose financial year coincides with the calendar year) nerves begin to emerge because the budget period has arrived.

I want to put this out because I am still finding many medium and small companies that do NOT make a fairly and acceptable budget and even more, many of them do not make a  budget, which gives us an idea of how much remains to be done.

  

I will not now enter into the debate of whether it is necessary or not to make a fairly professional budget. I leave it for another occasion because the issue requires more than one line. I prefer to enter into the debate of how an Annual Budget containing the Commercial Strategy should be performed.

Commercial Strategy will be divided into Marketing Strategy and Sales Strategy. As we said previously the Sales Strategy will have an Operating Sales Plan and a Strategic Sales Plan.

The Operational Sales Plan is where all the sales figures to manage the company are collected. Many people within the company "only" have eyes to what is collected in the Operational Sales Plan but again: "sales figures are collected". I am of the opinion that the sales figures are the result of sales actions, i.e. first "seeding" with sales actions and then "collect" sales figures. I think this approach will help us a lot in later debates.

Annual Budgets together with the Commercial Strategy can follow the model of "Top - Down", "Bottom - Up" or "Point of agreement". Budgets "Top - Down" are these defined by the General Management and settled across the enterprise. Budgets "Bottom - Up" are those who start from the base and are accepted by the General Management. Budgets based on "Point of agreement" are those that combine the previous two and end up in a mutual agreement between the parts. It is absolutely not necessary that the agreement represents the middle point between the two proposals.

The General Management usually sets in a fairly rigid manner the Strategic Medium Term Plan (generally five years) within the Corporate Strategy. It is quite logical that this Plan is geared to achieve strategic objectives and therefore usually "a priori" is a fairly rigid Plan. 

For the Annual Budget, General Management previously will establish objectives and guidelines of the year (Top - Down) while the Commercial Management with its corresponding sales teams generates the Strategic Sales Plan. Meanwhile Marketing Management develops the Marketing Strategy. Both Managers will have "in mind" the previous objectives and guidelines established.

Commercial Management includes in its Operational Sales Plan figures resulting from the actions defined in its Strategic Sales Plan and Marketing Plan. Clearly many other internal and external parameters are taken into account when developing the Operational Sales Plan.

Commercial Management contrasts with the General Management the objectives and guidelines Top - Down with Sales Strategy (Operational Plan and Strategic Plan) Bottom. - Up. The resulting Annual Budget should be a "Point of agreement" where both parts have adjusted their starting point. This agreement is crucial to generate "motivation" and "commitment" being the only right principle to create a successful selling machine.

If the agreement found presupposes significant deviations from the medium-term Strategic Plan, General Management shall try to correct the deviations in the following years. If not possible, it is necessary to review the Strategic Plan and consequently the Corporate Strategy all conveniently using the defined strategic indicators in the Balanced Scorecard.

Refining commercial machinery in order to become competitiveness supposes to have aligned all business processes. Again, it is very important the "agreement" between the parts but it is also very important the "commitment", "engagement" and the "compromise" of all employees once established the agreement.

Only then we will build a selling machine!