Dwight D. Eisenhower once said, “Plans are worthless, but planning is everything”. In college, we are taught that budgets are going to be part of our everyday life. Whether it’s for our own personal life or the demands from our future employers who they themselves will have received instructions from the company to follow a budget. Yet, we have come to understand that life is not “fixed”, life is a variable of unexpected events of both fortune and misfortune. So, why on earth would a business rely on a budget to take care of their precious capital? The answer is, it shouldn’t. Let’s find out why.
You’re probably telling yourself right now that you do not follow under these other people in following a fixed budget cause yours is based on actual sales figures from the year prior. This form of budget tends to damage more companies than it helps. This is due to the fact that companies tend to constantly change numbers to fit into last year’s sales, thereby creating a false sense of accomplishment within their team. Employees will actually stop making too much money in order for them to not have to grandfather it into the next budget, because they know too high of a target next year might cause them their jobs. On the other end of the corporate spectrum, managers will spend any excess funds made that year in order to meet their budget and present balanced budget sheets to their inventors. In retrospect, many for example will hire company services like the industrial roll off chicago heights il in order to spread out some of these funds.
So, If Not Type of Budget Is Good Then How Do I Run My Company?
The simple answer comes to us by CFO of one particular group. She tells us that while her company is not out there having a free for all in spending, careful analysis of any spending expenditure is looking into by her team. She claims that his way employees are not tied down from buying certain products that could make the company a hefty profit just because it doesn’t “fit” into the budget. This is what you call a long-term budget where a business does not attempt to predict anything, what it does is allow the “planning” of the future.
Small Business Planning
Let’s say you have a small business and you do not have the large financial teams of that CFO’s group. What if we told you that you do! They’re your employees and they have a great sense of what’s going on in the fields, sometimes even better than the owner. So next time you’re wondering if you should invest in that training program or in better marketing, stop and ask your employees what their take is regarding a purchase. Lastly, always overestimate your costs. This goes back to “planning” where the best course of action with a “budget” is to expect the unexpected, remember every client is different and every client will bring you different outcomes. So, roll up your sleeves and get your business back on track.