Midas or the Budgeting curse
Midas or the Budgeting curse Let’s call him Midas. While he drinks hot coffee and receives a bag of food after waiting for his turn in the long line, he shares a little bit of his story with me. A long time ago he was a successful jewelery entrepreneur in Gondomar, a business he inherited. Gold is a commodity highly subject to fluctuations caused by macro factors. «I lost everything», regrets Midas. Photo credit: http://www.lisbonne-idee.pt/p4994-rota-filigrana-riquissimo-trilho-gondomar.html He recognizes that, over the years, he made a number of mistakes regarding his business strategy. He relied too much on the manager responsible for executing the annual budgeting. Midas found out too late that since making accurate estimates was time-consuming, the manager did it fraudulently. Sometimes he underestimated budgeted revenues and other times he overestimated budgeted costs, to achieve targets more easily, creating a budgetary slack. In addition, ...
