Business Piggy Bank

Your Piggy Bank

Out with the old, in with the new—It’s time to examine the past year’s business results and craft a fresh budget for the year ahead.

“In January, we look at the products or services where we spend our time and from that review we make decisions,” says Lisa Crisalle, who, with husband Lucho, owns Exercise and Nutrition Works, a nutrition certification program in the sports and fitness industry. At the beginning of 2011, the couple made a profitable discovery—the online segment of their business had added $97,000 to their 2010 revenue “without paying any attention to it.”

In business terms, the difference between one’s planned budget and reality is what is known as a favorable variance. The flip side of these situations, unfavorable variances, typically requires corrective action. But in the Crisalle’s more positive example, the results from the budget review prompted action as well. Having identified a new, promising growth segment of their business, they undertook a bold, strategic move. “We closed down the brick and mortar facility,” says Lisa. “We realized we could run the business from home with all this overhead eliminated.”

Identifying budget impacts

By become entirely web-based, the Crisalles were then able to relocate the business from Irvine, California, to Las Vegas, Nevada. “It was the best decision we’ve made,” Crisalle explains. She estimates a 15-percent tax savings to the business based on the favorable tax climate in Nevada, which is ranked fourth-best among the 50 states by the Tax Foundation.

Also, the in-person workshops the couple conducts now draw more people thanks to Las Vegas’s entertainment allure, great hotel deals, low airfares, and ease of access from around the country. “Our business has exploded since we moved here last March,” she says. By focusing their attention on the most profitable areas of their business, cutting unnecessary overhead and expenses, and reducing their tax impact, the Crisalles have added an extra half-million dollars to their bottom line in the last 18 months. And they show no signs of stopping there.

“We’ve mapped out the entire year for 2012 with a complete plan of action,” Lisa Crisalle says. Internet marketing is now the largest component of their budget and they have reallocated funds to hire a business manager, “so my husband and I can focus on business-building activities.”

Setting goals for the future

At the end of the year, tallying actual spending, revenue and the overall performance of the business compared to goals and expectations can help to identify areas for new direction.

“There is a difference between an educated guess and a hunch, between a guess that is based upon a rational appraisal of the range of possibilities and a guess that is simply a gamble,” says Peter Drucker, author of the business classic The Practice of Management. A half-century later, Maria Gamb, motivational speaker to the same audience of Fortune 500 business clients, helps her clients set clear goals, formulate business plans and find their leadership voices.

As the head of her own company, NMS Communications, she is just as inspired to improve performance as she would be for her clients. “If there’s no ROI, there’s no reason to do it,” says Gamb. “We break down every component where money is leaving—from the fax service to education, and we look for the return on investment on each,” she says. Her company was able to cut its outbound expenses 60 percent in 2011 by acting upon knowledge gleaned from a year-end review last winter.


After her book, Healing the Corporate World, unexpectedly shot to number six on the Amazon Business Leadership chart, a big budget change for Gamb in 2012 will be reallocating the travel budget toward speaking engagements. “Effectively, the travel I did before wasn’t as necessary and the ROI was stagnant. Now, we’re making travel an upward tick,” she says. Spin-off goals are to reduce unnecessary trips by conducting meetings by telephone or Skype, and concentrating travel to the New York tri-state area for east coast business and to San Diego for west coast projects.

Just when you thought your budget reviewing was done for the year, there’s more to do, says Jeff Wourio for Microsoft Business. “Check your budget every month,” he advises. “This is a point that I cannot stress enough. Go over your budget every month and examine your cash flow to make certain your available funds are sufficient to meet your liabilities.”

The pay-off for conducting an end-of-year budget review is a clear understanding of problem areas and decisive anticipation of opportunities for growth, and leaning forward, this means greater momentum toward success.

Getting started

Budget preparation checklist (adapted from Harvard Business Press’ “Preparing a Budget):

  • Goals, objectives, strategy, mission, sales projections, market data
  • Current sales, industry expectations, assessment of competition, impact of new technology
  • Labor costs, changing requirements, expected outsourcing, contract changes, expected overtime
  • Variable costs: supplies, maintenance, power
  • Fixed Costs:  depreciation, property taxes, insurance, supervision
  • Marketing/advertising, customer service, administration, distribution, R&D (fixed or variable).

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Published On: August 31st, 2022 / Categories: Uncategorised /

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