A budget is a plan.
That’s all it should be.
Let’s be honest at the start of 2020 people were not calculating how to incorporate the adjustment that would come from a worldwide pandemic. No matter what type of industry in which you operate, there were far-reaching ramifications and everyone had to adjust. The budget situates you for success, growth, and should allow you to figure the best way to operate. It isn’t carved into rock though and thinking otherwise is an immature perspective.
Obviously, many companies have to report to shareholders. That means you must rely on a budget to show profit, exercise planning skills, and demonstrate you have a plan of addressing the next year (or quarter, or month).
Before I started this company, I was in media sales management for nearly 20 years and prospects would use their budget as a defensive weapon. “Sorry, Bruce, that isn’t in the budget this year.” Inside my various television stations, it was an offensive weapon. “Bruce, we need to see you generate a 9% increase so we can spend an extra $200,000 on the latest piece of TV technology.”
Regardless of how it was used, I would routinely hear from prospects (and then clients) things like, “well, we don’t have an actual budget.” Companies which employ a budget are a step ahead, and it’s a wise call – it allows you to delegate control to department heads, know where you are going, and demonstrate an ability to set a goal. Those are important benefits.
Here’s the thing about a budget – you’d better be prepared to adjust and adapt.
The best ideas don’t always come to you in October for the following year. Have a plan, but be ready to adjust if a great idea comes in March and you think it will help you. If there is one thing I’ve learned as an entrepreneur over the last dozen years, it’s that you have to be ready when the right idea, person, or client comes along. Don’t make the mistake of using your budget as a shield – or as a crutch. Instead, be prepared.
The budget you set this month for next year is a tool. Use it wisely, but don’t use it exclusively.
Check out these related insights from deep within our archives!