Budget and Profit Goals

Budget and Profit Goals

Items to be considered when determining achievable goals

A profit goal will relate to the amount of money an entrepreneur will need to enable them to cater for some predetermined commitments for the future of their business. The following factors enable a manager to direct their actions and strategies for them to attain the profit goals that they desire to achieve. The first factor is the cost which relates to the fixed cost and the variable cost (Creed & Hood, 2014).  A good example is a rent and the cost of maintenance. They are the cost that they will incur for them to get any output. Secondly is the owner’s annual income. One should evaluate their income for them to have a rough idea of the profit goals that they are aiming to place which might include superannuation.

The other factor is the return to risk. Running a business is susceptible to a lot of risks, and therefore, one should consider speculation of the probable risk that they might limit their profit margins. For one to measure whether the profit goals they have set are achievable, they ought to consider the returns for future growth. They may include the funds needed to develop their business. The last factor that should be used to determine whether the goal is achievable is the return on the borrowed capital. The aspect refers to the number of returns got from the capital invested. The returns should be almost the same with the bank interests based on the levels of risk.

Roles of departmental managers

Departmental managers are always involved in the process of budget formulation. Most importantly they are supposed to ensure that they provide relevant information that is based on their specific department for the formulation of the budget to be easier (Rothwell, Jackson, Ressler, Jones & Brower, 2015).  The departmental manager is given the responsibilities of managing the day-to-day expenditure against the budget that is produced. It is important since it provides the senior manager with the opportunity to share the work and enable them to hold the departmental managers into account. However, the departmental managers cannot oversee the entire budget or control it. They also don’t have the power to confirm the budget to the financial procurement regulations. A Human resource manager always deals with different employee-related activities in the company. They delegate duties that suit their employees and conduct training.

On such a situation of budget constraint, the manager should ensure that he/she analyses the problem which will involve the causes of that problem. Secondly, he/she is supposed to analyze the most important activities that are inevitable in the organization. These activities should be catered for which are composed of those which an organization cannot survive with. Communication is also important as he/she is supposed to communicate with all the stakeholder in the organization to ensure that they know about what is happening in the company so that they are prepared for any tight environment of limited resources.

Decisions based on budget constraints

Management can predetermine potential changes that may crop up during a budget cycle based on what has been happening before. Through a review of budget reports, they can have assumptions about possible issues and therefore they could plan for possible solutions. Through close monitoring of the entire process, the team can mend any changes to align it with the desired plan. A possible example is a situation whereby the human resources management falls into low rates of assumptions then later the money allocated cannot be enough (Kolk, Bogt & Veen-Dirks, 2015).  In such cases, the manager should be in a position to restructure and correctly forecast the budget to ensure smooth follow up.

Some of the steps that the HR needs to follow to ensure that they meet the organizational budget are assessing the current HR capacity, which ensures that they can know the current staff needs. The other step is based on forecasting HR requirements with involves assessment of the demand and supply in the organization. Thirdly it is based on the analysis of the gap where the organization wants to be and where they are currently. Finally, it is based on the development of HR strategies that will be able to support the organization. Such strategies include collaboration, outsourcing, and training (Kolk, Bogt & Veen-Dirks, 2015).

References

Creed, P. A., & Hood, M. (2014). Disengaging from unattainable career goals and reengaging in more achievable ones. Journal of Career Development41(1), 24-42.

Gitman, L. J., Juchau, R., & Flanagan, J. (2015). Principles of managerial finance. Pearson Higher Education AU.

Rothwell, W. J., Jackson, R. D., Ressler, C. L., Jones, M. C., & Brower, M. (2015). Career Planning and Succession Management: Developing Your Organization’s Talent—for Today and Tomorrow: Developing Your Organization’s Talent—for Today and Tomorrow. ABC-CLIO.

Van der Kolk, B., Ter Bogt, H. J., & van Veen-Dirks, P. M. (2015). Constraining and facilitating management control in times of austerity: Case studies in four municipal departments. Accounting, Auditing & Accountability Journal28(6), 934-965

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