It's that time of year again – planning and budgeting for next year. Many people find budgeting a stressful chore, that bears little relationship to the rest of their working life. In fact, budgeting is the financial plan needed to execute the business strategy.

SO, here are a few tips to help you:

Many organisations start their budgeting by taking the previous years figures and applying some across-the-board multiplier to it. For example, ‘last year + 5%', or ‘last year -5%', if we think it's going to be tough. This is rarely helpful. Even if your organisational goal is ‘last year + 5%', it does not tell you how best to use your money. Given the rate of change in business today, it is likely that you will need to do things differently even if the goal is only slightly different. Simply fiddling with last year's budget may actually prevent you from delivering your goals.

Start with your planned goals – what do you have to achieve? If you have to set your budget before agreeing your goals, beware! The budget will become your goal. Be realistic in assessing the resources you need to achieve your goals. Consider the people, both internal and external, the services, any physical resources and the projected income. Then look at the implications for the goals if the resources are not available.

If you work in the public sector, you may have your total spending power fixed in advance, regardless of what you have to achieve. This often happens to service functions in the private sector. HR and Training functions are often told what they can spend, and then left to work out how to make the most of it. The reality of this situation needs to be made clear to those setting the spending limits. Showing how the organisational goals lead directly to your proposed budget is critical for winning credibility (especially if you believe there is not sufficient spending to deliver the required goals).

Every manager would like more resources, so the competition for spending power is tough. As with a fixed income, you need to show a clear line of sight from the Organisational Goals to your proposed budget. If possible, you need to indicate the return on investment that the organisation will get from allocating resources to your budget. Even if you don't win the argument, you will certainly win respect.

Every budget is about risk. What resources have we got to risk in order to deliver the expected result? Remember, when you set a budget, it is your assessment of business risk that is on show. We cannot predict the future. Business is changing so fast, that if your budgeting process is too long, it may not reflect reality by the time it is finished.

We were delighted to find a software solution from Canada that follows our thinking of aligning L&D activity with organisational goals, using ROI processes as a decision support tool and providing a range of L&D budget maximisation tools. We are now using the software in our projects with clients. It is also available to buy independently for use within your own L&D or Training Departments. Known as ADVISOR, the software is widely used across North America . We are delighted to bring it to the UK – if you would like to know more about it, just reply to this email. Alternatively, see the website www.3ctraining.co.uk for further info and links to online demos.

The next Management Voice will be the week commencing 8th January 06. I hope you find some time to enjoy a break.