Making decisions based on a budget mindset takes time, thoughtfulness, and compromise. It also creates a clear and achievable pathway to success. As financial guru Dave Ramsey says, “A budget is telling your money where to go instead of wondering where it went.”
Budgeting shouldn’t just be an “owner” activity. The basics of finance, budgets, and spending should be concepts your employees can participate in—and you can teach them!
Conversations about expenses don’t have to be taboo, but you do need to decide who on your team needs to be part of the dialogue. Who can champion this piece of the budget? Are there multiple team members or department heads who need to manage their project costs? One thing’s for sure: Whoever participates in budgeting needs to have a clear understanding of the outcome. You need to paint a picture of what “done” looks like. What is the goal? What does winning look like for a specific project?
Let’s run through an example of how you can teach your staff to make decisions with a budget mindset, using the four steps below.
Studio goal: Increase enrollment
Project: Enroll prospective students through the sale of “Princess Packs”: a package that includes a dance bag, leotard, and crown
Delegated to: school director
1. Set a project goal
What does success look like?
Work with your school director to determine what a successful outcome looks like. If your studio goal is to gain 30 students, perhaps this project needs to enroll at least 10, without exceeding a $100 budget. Setting a goal together opens up a conversation about what the business needs from this effort.
What is the supply budget?
Walk through what each Princess Pack should include and where your school director can look to source those items for an acceptable price. Talk about the maximum spend and how to balance product quality and cost. For example, you might suggest purchasing all items through one vendor to save on shipping charges.
3. Anticipate roadblocks
What pitfalls could happen?
Talk openly with your school director about possible mistakes and how to prevent them. Share examples of past hiccups, such as purchases made without prior approval, budget overruns, or inadequate shipping time. Discuss how to fix problems before they begin!
4. Feedback and follow-up
When the project is complete, circle back to the beginning. Was it successful?
Always make follow-up an expected piece of the process. A great formula for follow-up is to encourage comparison. Ask what went well and what could have been better. In this example, allow your school director to share her feedback about the process. You want her to feel confident in her decision-making so that she can take on similar projects with less involvement from you.
Control Costs and Empower Your People
Consider other areas where your employees can get smarter about spending. Where else can you walk through these four steps? Consider the processes for ordering office, printing, cleaning supplies, costumes, classroom activities, meals, gifts, technology. Encourage each leader to put a budget mindset front and center.
Digging in and sharing numbers can be overwhelming for you and intimidating for your people. But the results will speak for themselves! Just imagine how efficient and effective your business would be with your office manager planning supply orders and printing expenses, the curriculum coordinator reviewing classroom supplies, and the director of operations auditing time cards and cleaning costs.
The beauty of this process is that your team will begin to think beyond the immediate and into the long term. A budget mindset serves what’s best for the customers, employees, and the business for years to come. With you as their guide, your staff will gain confidence in making smart financial choices.