Business managers grapple with budget flexibility in turbulent economy – experts
By Abimbola Mohammed
In a recent address to business managers with profit & loss responsibilities, a seasoned expert Hannah Oyebanjo, managing director at Redwood consulting, stressed the importance of adaptable budgeting in today’s economically volatile landscape.
Oyebanjo highlighted the benefits of budgets, including ensuring financial stability, setting financial goals, guiding resource allocation, and monitoring performance.
She made this known on her LinkedIn post where she noted that her submission on the topic was made at a recently held event as the guest speaker. According to Oyebanjo, who said she was asked how often budgets should change in response to external factors, “How often should sales targets be revised upwards in a turbulent environment?, she countered.
Her submission was that while businesses must curb costs and drive sales, there should be room for reviewing budgets in response to unforeseen events, such as Nigeria’s recent fuel price increases.
The industry leader acknowledged the challenges of navigating turbulent economic times but emphasized the need for agile budgeting to mitigate negative impacts, such as layoffs.
“We finally agreed that it is a challenging period, but managers must make utmost attempts to curtail costs while pushing for more sales. Otherwise, businesses will take more negatively impacting decisions like lay-offs etc. That said, there should be an allocation or window for reviews when unexpected upsurge emerges, for example the recent fuel price increments in Nigeria,” she said.
Responding to Oyebanjo’s post, Tunji Adeyinka, GMD at Republicom Group, a Marketing, Sales and Technology Group, noted that introducing a new element into business budgeting should be based on critical macroeconomic factors.
“I have personally introduced a new element into business budgeting based on some critical macroeconomic factors. Every business leader operating in an economy like ours must know how the macro factors affect their business. Linear progression in revenue growth is not sufficient in these times,” he said.
“To make it very real, I always ask that you translate your profit in the last two years into USD to see what your real profit is. With inflation at 30%+, real growth must be higher than inflation, therefore, budgeting cannot be linear. If you continue with the same 10%, 15%, or even 20% growth which was sufficient growth five years ago, your business would be dead. But the key part of the process for me is that I guide the managers to arrive at that point by themselves,” Adeyinka added..
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