Budget2012

Budget process 2012

Why we are here ?

We need a Change !

Just to be on one page on structure of budget process.

Not to discuss how it used to be, but how it would be!!!

To give you understanding of your participation into budget

Reasons to have a budget in the company.

Budget is for improving quality of management’s decisions

Budget will help all of us to rise the company’s effectiveness

Budget can help us to compare “What we would like to have” vs “What we actually have”

Budget is a very useful tool to estimate financial needs

Sad but true…

or a couple of words on theory

Center of financial responsibility (CFR)

CFR – A division or unit of an organization for which a manager is held responsible.

There are 3 different kinds of CFRs:

Cost centre - a division or unit of an organization that is responsible for controlling costs.

Profit centre - a division or unit of an organization that is responsible for achieving profit targets.

Investment centre - a division or unit of an organization that is responsible for achieving an adequate return onthe capital invested in the division or unit.

We are a management team

Profit center

Central Lab , Existing stores

Investment center

Biz Development,

New stores

Operations department;

Purchases department;

Costs center

All departments

Process of managementTargets

Planning

Execution

Motivation

Control / regulation

How it’s work

Strategic drivers

KPIs definitions

Budget model

Budget Actual Variance

…. …. ….

Planning- Budget planning- Budget approval

Accounting- transactions booking

Variance analysis- analysis of deviations

Management decisions- Operations decisions- Budget expectation

Key drivers

have to be done till the middle of the

June

Sales Budget;

Planned quantity of stores;

Salary Max growth rate;Bonuses rate;

Other costs Max growth rate;

Changes in personnel (vacancies etc.);

Otherstrategic targets

Profit and Losses statement & Cash Flow

P&L is a combination of 2 parts:

2. Other company costs and revenues

1. P&L stores

Net sales own stores Operations dep,COO end of June

Direct material costs

Operations dep, purchase dep,COO end of June

Other direct material costs

Central Lab end of June

retail occupancy Operations dep, finance department, Legal dep,CEO,COO middle of July

retail personnel salary

Operations dep, COO middle of July

advertising net Marketing dep, CEO middle of July

other store expenses

Operations dep,COO middle of July

other operational costs

CEO, finance dep middle of July

P&L of store

01Rent02 Salary

03 Advertising04 Insurance

05 Notary, Legal06 Motor expenses07 Office expenses

08 Repair09 Representative, entertainment

10 Business trip exp11 Security

12 Staff expenses13 Communication

14 Software15 Consulting

16 Audit18 Taxes

19 Bank Servises22 Lease payments

All

adm

inist

ratio

n de

part

men

ts

Till the end of July

Other company costs and revenues

Inventory

Opening Balance + Purchases

- Direct material costs (including

plan for obsolescence

provision)

= Closing Balance

CAPEX preparation

CapEx & IA

Office CapEx

All administration departments

Store CapEx

IT-dep ((IT equipment, Software)

Lab-technical department (medical equipment)

Operations (repairs, low-value assets for

existing stores)

Central Lab CapExCentral Lab

Till the end of July

Structure of budget packDeadline for Company is17.10.2011

P&L

Cash Flow

Balance Sheet

Narrative paper

Budget presentation

17.10.2011

01.07.2011

Questions ?