Everybody complains about budgeting, and almost everybody tries to do something about it. The companies profiled in this month’s cover story have done something: they’ve scrapped the process once and for all (“Freed from the Budget”). Thanks to techniques like rolling forecasts and continuous planning, companies like Group Health Cooperative in Seattle and Holt CAT in Texas no longer have to submit to the arduous annual task of constructing a document that can depreciate in value faster than a new car. They can adapt more easily to changing market conditions and, in the words of Statoil executive Bjarte Bogsnes, “set targets that motivate and inspire people without all the gaming and pay negotiations.”
It sounds almost too good to be true, and in fact, only about 80 to 100 companies worldwide have ditched the budget, as contributing editor Russ Banham found. Eliminating budgets takes a lot of hard work, and many companies fail in the attempt. But those that have succeeded say it was well worth the effort.
To many small companies, the suggestion that financing is getting easier to obtain may also sound too good to be true. Yet surveys and loan approval rates indicate that the credit crunch for small business may be easing, reports contributor Alix Stuart (“Warming Signs?”). Even some big banks seem to be loosening their purse strings. What’s more, the JOBS Act has made it easier for small businesses to raise equity capital in a variety of ways, including crowdfunding.
There are reports, however, that companies are increasingly reluctant to borrow, thanks in part to the sluggish economy. U.S. gross domestic product grew just 1.5% in the second quarter, and the 48 professional forecasters recently surveyed by the Federal Reserve Bank of Philadelphia now expect real GDP to grow at just 2.2% in 2012, 2.1% in 2013, and 2.7% in 2014.
Sluggish growth isn’t a problem for Godiva Chocolatier. The high-end chocolate retailer has racked up double-digit growth in each of the last two years (“Business Is Sweet”). Chocolate may be a recession-resistant business, but Godiva doesn’t take anything for granted, says CFO Dave Marberger, constantly changing its products and expanding into new markets, like China.Even double-digit growth pales before the quintuple-digit explosion at Ideeli (“Trendy Growth”). The flash shopping site’s revenues grew 40,000% over the last three years, making it the country’s fastest-growing company in 2011. “You wear many hats when you’re a small-market company that’s growing this fast,” says CFO Bob Ross. And in this case, sell them, too.