By Abiola Ayankunbi
Baring any unforeseen circumstances, 2021 budget for all the newspapers firms ought to have been ready by now because budget is a working document. Budget is one of the means by which firm’s resources can be allocated; it may be strategic, tactical or routine allocation.
A budget is therefore a comprehensive and co-ordinated plan, expressed in financial terms, for the operations and resources allocation of an enterprise for some specific period in the future.
Three types of budgets are to be blended together for effectiveness in an ideal media establishment; they are capital budget, operating budget and financial budget. Capital budget allocates resources for new products, and also for expansion programmes and projects, together with their timing of estimated cost and cash flows for each project.
Operating budget allocates resources to various functional programmes or activities as well as resources for individual responsibility e.g production budget, sales budget, purchasing budget, advertising budget, training and development budget.
Financial budget refers to the financial implication of resources allocated to various operations. It consists of expected cash inflows and outflows, financial position and operating results. Its components include cash budget, projected proforma balance sheet and income statement, and statement of changes in financial position of the company e.g sources and uses of funds.
Sources of fund available to newspaper firms are revenue from copy sales, subscription sales, space sales, unsold copies, production wastes (ink, plates, tear-off, drums, gallons, etc), strategic partnership, sponsorship, depreciation of assets, third parties printing, etc while uses of funds are personnel cost (salary, benefits, promotions/incentives, training, etc), air and land freighting costs, maintenance cost, travelling expenses, advert commission, communications, taxes, Basic Transport Allowance, Fuelling of delivery and official cars, computers, etc.
The sales (income/revenue) budget not only sets goals for the department, it also provides framework for the company’s overall budget. Ideally, every other budget is based on the sales budget. This is why the sales budget is always the starting point for the overall budget. A newspaper firm must know how many copies of newspapers it will sell and by extension, how many pages of adverts expected per edition before it can determine purchasing, manufacturing and capital expenditure budgets.
In other words, the production budget is prepared after the sales budget. These budgets are then combined to cash budget. The sales budget triggers a chain of reaction that leads to the development of other budgets.
In order to produce an ideal budget, certain factors will enhance it. Top management needs to support resource allocation while the presence of a structure or a committee for effecting resource allocation is desirable. Participation in budget preparation by all managers required to commit allocated resources to implementation is a must. There is a need for the departmentizing of company activities into responsibility centres or cost centres to which allocated resources will go.
Furthermore, there should be budget training and development for managers. Availability of standards against which programmes and works can be translated into needs for labour, space and resources is a must because standards will aid the evaluation of resource utilization. There is a need for realistic goals to which resources will be committed for attainment.
There is a need for a budget manual- a written set of instructions and pertinent information that serves as a rule and reference for the implementation of a budget programme. it expresses objectives, goals, procedures structure, authority and responsibility relationship in the organization. This must be made available to all heads of department as this will avail each and everyone knows the relationship between his department’s budget and other departments’ budgets.
However, it has to be coordinated by Financial Controller with not less than five years cognate working experience in the industry. In the absence of a Financial Controller, an Accountant can do the work, to be ably assisted by the Internal Auditor; the two office holders must posses prerequisite experience.
It will be an understatement to state that newspaper firms 2020 budgets’ performance will be horrible! The industry was on a “life support machine” but it was compounded by the effects of covid-19 and aftermath effects of #Endsars protest.
Regrettably, most of the newspaper firms do not have budgets! Their budgets reside exclusively in the consciousness of the executive publisher or Managing Director/Editor-in-Chief and Financial Controller. They are just concerned in directing the revenue centres to generate XYZ amount of money within a specific period of time without brainstorming on how to raise such. Since budget is not discussed, implementation and review of projection versus actual are mostly not given necessary consideration.
Conclusively, just like Lowson said in 2003, media managers should exercise control through rigid managerial hierarchies, standardize input to reduce variation, defects and control costs, use quantitative forecasting methods to predict changes.
Ayankunbi is MD/CEO at AbingMO3 Marketing Management Consultancy.
0802 305 1315
abiolaayankunbi@yahoo.com
