Let’s see, how do most companies create the budget? …Look at last year, add or subtract dollars and let the various departments figure out how to implement the budget tactically.
Well, I asked one of my clients recently (which will remain nameless) "what is the plan for next year?" And all I got back was "The budget will be the same or less than this year." That’s not what I asked. I reminded him that I wanted to know the plan, their goals for 2010. I want to assist this client in achieving their goals and objectives. A deer in the headlights moment. I got a few areas they would like to reach out to, but it was not well thought out. Hopefully there will be a more serious look at what this organization wishes to achieve for 2010 and that I could possibly help them achieve.
How sad. And this was no small client, well it certainly has become one this year and will continue to shrink with that type of thinking.
In a recent blog by Seth Godin, a well-known marketer, titled "The hierarchy of success" got me thinking not only about budgets by planning as well. In it he goes through the six steps towards success:
Now many people only consider steps 3-6 and not steps 1 and 2. Well in some of my experience, I have not seen steps 3 and 4 played out well in business either. Instead of rehashing what Seth has laid out, just click the link and I will let you form your own conclusions.
My bottom line is to ask, not what is in your budget, but where to you want to "go" next year. What are your goals? Is your attitude positive and in line in achieving those goals. What about your approach? Then spend time laying out the strategy. Implementing the tactics should not be where you spend the most time.
So setting a budget is not so much of a dollar amount, but rather setting a realistic and achievable stretch-goal and then developing strategies around it.