As you gradually make the move from engineer to engineering management you inevitably take on more administrative duties and eventually this path will yield up responsibility for a budget. This can be a scary thing for techies, but the good news is the world of accounting is no different to anything else we do - you can peel away all the layers of complexity we're so fond of creating and reduce it to a mere handful of things that really matter.
Here are my 5 simple rules for responsibly managing any budget of any size:
- Teach your staff about ROI. Get them in the habit of putting things forward to you in a cost/benefit format, it's good practice for them and will save you time having that 1st level filter in place.
- Every £1 spent must return more than £1 in value. Sometimes this is obvious and sometimes it can be a little intangible; try imagining yourself explaining it to your boss and if that feels OK it'll probably pass.
- [once past number 2] There must be no better use of that £1. If you decide, for example, it's worth spending £2K on attending a conference then have a quick think before committing that cash. You've determined you're prepared to part with £2K so what else could you do with that money, and do any of those other ideas return more business value?
- Always manage to the bottom line. There are a whole lot of ways to look at how cash resources are being utilised - headcount, line categories, fixed and variable costs etc but at the end of the day the only material thing that matters is you spend less than you earn.
- Don't go over budget. Sounds simple but it's amazing how many people do this all the time; for the best of reasons - they think it's OK if it's for a good reason. It's never OK, cashflow is the heart of every business. If you have a brilliant idea but not the available budget to do it then put together a business case and ask for more.
Managing a budget doesn't have to be that difficult, with a few simple rules and a bit of common sense you'll still have plenty of time left over to see some engineering get done!