If nothing unexpected happens, all media firms should have their 2024 budgets ready by now, as the budget is a working document. The budget is a tool that can be used in a strategic, tactical, or routine way to allocate a company’s resources. A comprehensive and well-structured financial plan, a budget describes how an organization will allocate its resources and run its operations over a specified period of time in the future.
A capital budget, an operating budget, and a finance budget are all combined into one in the perfect media corporation. Capital budgets typically schedule the estimated costs and cash flows for each project in addition to assigning resources for expansion programs and projects. In addition to funding individual accountability, the operating budget distributes monies to a number of functional programs or activities, including the budgets for production, sales, purchases, advertising, and training and development. The “financial budget” explains how the distribution of resources across various businesses will impact the bottom line. It includes projected cash inflows and outflows, financial position, and operating performance. A projected proforma income statement and balance sheet, a cash budget, and a summary of changes in the company’s financial situation, including the sources and uses of funds, are its constituent parts.
The media budget must contain money from a variety of internal sources, including copy sales, subscription sales, space sales, unsold copies, production wastes (ink, plates, tear-off, drums, gallons, etc.), strategic alliances, sponsorship, and asset depreciation. Costs of air and land freighting, maintenance, travel, communications, Basic Transport Allowance, fueling official and delivery cars, computers, website hosting fees, internet facilities, and personnel expenses such as salary, benefits, promotions, and training will constitute the expenses in the budget. However, if fund from internal sources is not enough for the successful implementation of the budget, the company is at liberty to seek for fund elsewhere but payment plan should be given utmost importance.
The sales budget sets target for the department and frames the company’s overall budget. The sales budget should ideally serve as the basis for all other budgets. Because of this, the sales budget always comes first in the overall budget. A media corporation must determine how many copies of newspapers it will sell and, consequently, how many pages of advertisements it can anticipate every issue before establishing budgets for purchasing, manufacturing, and capital investments. In other words, the production budget is developed after the sales budget. These budgets are combined to form the cash budget. The sales budget triggers a chain of events that lead to the development of other budgets.
To develop the ideal budget, a few factors will make the process better. Top management must support resource allocation, even though the existence of a committee to supervise it is beneficial. Participation in the budget planning process is essential for all managers who must commit resources to implementation. It is essential to departmentalize business operations into cost or responsibility centers that will receive funding. Training and development on budgets should also be provided to managers. Since standards may be used to convert programs and works into labour, space, and resource requirements, they are essential to making the assessment of resource use easier. Setting and allocating resources is necessary to achieve realistic goals.
To give instructions and references for carrying out a budget program, a budget manual is necessary. It outlines the organization’s goals, protocols, power dynamics, and roles and duties. This should be available to all department heads since it will help them all understand how their department’s finances relate to those of other departments. However, it must be supervised by a financial controller who has at least five years of relevant experience in the industry. When a financial controller is not available, an accountant can take over with the assistance of an internal auditor; both individuals must possess the requisite experience.
Regretfully, there are media companies that have no budgets! They are exclusively in the head of the managing director, editor-in-chief, or executive publisher. They are just interested in instructing the revenue centers to generate XYZ amount of money within a specified time frame; they don’t care how the money is raised. Since there is no budget, implementation and comparison of planned and actual tolls follow the same path. To put it another way, without a budget, nobody can talk about how well the budget from the prior year worked.
To sum up, media managers should use rigorous hierarchical structures to keep things under control, standardize inputs to reduce variance, errors, and expenses, and use quantitative forecasting methods to predict changes. This is consistent with the findings of Lowson (2003).
Leave a Reply