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Budgeting and Forecasting

Budgeting and Forecasting. The Good, the Bad, and the Ugly. What’s your method?. Throwing Darts Fortune Teller Tell Them What They Want to Hear and Hope It Happens. What Does Corporate Want?. How can you give them what they want? Where can you go for help?. Resources.

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Budgeting and Forecasting

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  1. Budgeting and Forecasting The Good, the Bad, and the Ugly

  2. What’s your method? • Throwing Darts • Fortune Teller • Tell Them What They Want to Hear and Hope It Happens

  3. What Does Corporate Want? • How can you give them what they want? • Where can you go for help?

  4. Resources • Historical information • National revenue • Market revenue • Revenue by month • Revenue by month by advertiser • Revenue by month by salesperson • Revenue % change • Multi-year trends

  5. The Process • 24/7/365 • Preliminary • Final Narrative • Local economy • Advertising • Competition • Staffing • Pricing

  6. The Process • Face the facts • You have to do it • You have to do it right • You have to do it by a deadline • Schedule the time • Assemble all your tools and resources

  7. Getting Started • The first step in projecting the future is examining the past • 3 year trends • YTD • % of total by month • Pacing numbers to determine current trend • Project revenues through end of year

  8. Factors to consider... Economic environment Advertising environment Competitive environment / station competitiveness Staffing realities Pricing realities

  9. Economic Environment Market Health Employment Conditions Retail sales • Where to look… • RAB.com • Business Journal • Chamber of Commerce • Online Searches

  10. Advertising Environment Audit firms Voicetrack Rep reports RAB Revenue Reports RAB Ad-to Sales Report Station audience

  11. Pull Traffic Reports Pull Top 20, 100, 200 Are their revenues increasing or decreasing? Why? 80-20 customers Strategy for retaining/growing existing business Strategy for growing new business

  12. What Are Your Objectives? Sell more clients? Sell current clients more often? Sell at higher rates?

  13. Competitive Environment “You can only take care of your own station(s).”

  14. Station Competitiveness Ratings Projected ratings Power ratio Market revenue

  15. Competition Who is your primary competition? Who is getting what shares? Competing media strengths and weaknesses Are there any new competitors? Who?

  16. Staffing Realities Current skill set and any plans for improvement Projected changes in the staff and your plan to respond New hires or planned new hires Projected staff size Experience vs. Expertise Your recruitment plan

  17. Pricing Realities Manage to your goals…

  18. Crunching the Numbers • Corporate or self-defined • % increase or hard number • Criteria • Top line (sales) or bottom line (BCF) • Cluster or individual station(s) • National • Local • New business • NTR • Inventory pricing strategy

  19. Budget Template • 13 columns • Back up your work • Learn Excel • Create line-items • Local • Regional • National • On air • Alternative Revenue • Event • Digital

  20. Salesperson’s Budget • Account • Category • Last year’s actual by month • Projected billing by month • Dollar change • % change

  21. Salesperson’s Budget Prep

  22. Increase Annuals

  23. Expense Budgeting • Zero based • Justification • “Outside the box” • Budget for RAB and other training

  24. Other considerations… Market value of 1 share point Projected rating or programming changes for your station(s) Projected rating or programming changes for competing stations Planned promotional and/or marketing initiatives

  25. Staff Involvement Your Numbers For a budget to have a chance of succeeding, your staff has to buy in and take ownership of the numbers Without their commitment, effort, and perseverance, you cannot achieve the goals Involving them in the budgeting process sends the message that it is their budget, too Your Staff Numbers Combined Input

  26. Staff Involvement Your Numbers Individual goals should be challenging Individual goals should be obtainable, with effort Compensate achievement Reward over-achievement Your Staff Numbers Combined Input

  27. Staff Involvement Your Numbers Sales people should be responsible for submitting their individual revenue projections to you at the beginning of the budgeting process. They should include all revenue subsets you are required to submit. For example, monthly, quarterly, and annual totals, NTR, new business, agency/direct, etc. Your Staff Numbers Combined Input

  28. Three Approaches to Projections by Sales People • Sandbagging • Pie-in-the-Sky • Aim for the Center In your one-on-one budget meeting with sales people, you have to know which approach they are taking and factor it into your “negotiations” with them. Insist on knowing their rationale and challenge them to explain their fallback plan.

  29. Expenses • ROI If the money is spent, how much return do you estimate from the investment • Bonuses for exceeding goal

  30. Budgeting and Forecasting The Good, the Bad, and the Ugly

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