Budget, Business Tips, Business Growth

It’s budget season. If you don’t know us, you may be surprised to hear that it’s our favourite time of year. Like the holidays, budgeting is all about setting goals for the future, and nothing gets us more excited than watching our clients grow with clarity and ease.

Budgets help with the obvious, which is funding your business goals. What’s equally important is they help connect your vision to the day to day activities of your company. We like to think of budgets as a key tool to manage your organization, whether your outlook is short-term, or even 10 years down the road. Budgets should be geared toward supporting the goals of your company.

So, what’s the best way to create a budget? We have two key pieces of advice:

1. Think about value rather than money

When you sit down to work on the upcoming year’s budget, don’t think about it in terms of dollar amounts; think about what you would do to create value. To help shift the focus, give everyone in your executive team a blank check and ask, “what would you do with unlimited resources?”

The budgeting process should be a creative exercise ahead of an arithmetic one. When you shift your focus from money to thinking about creating value for clients and customers, it allows you to think outside the box. This transforms the idea of a budget from something that limits an organization, to a driver of innovation.

You’ll also need someone to bounce your ideas off of and run what is ultimately a more involved process. When every department comes back saying they don’t have a big enough budget to pursue their ideas, it’s important to engage a professional to help you prioritize capital allocation. They can help you determine whether capital needs to be raised, which projects should be invested in, and when to roll them out.

2. Focus your resources on what you do really well

Successful companies know what they do really well and they invest in it. This helps them focus on a shared vision and move toward a bigger goal. If you invest in things your company doesn’t fully understand, or what doesn’t add to your value proposition, value chain or strategy, it’s a waste of resources and money. However, separating the wheat from the chaff isn’t as easy as it seems. Sometimes it takes a person on the outside to help identify what your company is good at. It requires a broader understanding of industry dynamics, people, competencies, and how all these moving parts fit together.

A question we’re often asked is whether a company can increase its valuation through better budgeting. Here’s our answer: while a smarter budgeting process will give you a better chance at success, it ultimately comes down to the decisions reflected in the budget and how well a team with a shared goal executes. The right professional will help you take on tough problems and will have the resources to help you solve them.