Budgeting time? Yawn. Boring, right? Nothing short of tedious…
Not so! Budgeting is actually fun. Well, maybe not fun… But it IS essential to setting your organization up for a good year.
Seriously, budgeting is incredibly important and shouldn’t be rushed. It’s a time when you get to step back and think about all the things you want to do and then consider which ones you can fund. It’s a time when you get to pull out that list of things that didn’t quite make it into the budget last year…or you didn’t even know about when you starting planning the last time around. And it’s a time to reflect on what didn’t live up to expectations, what wasn’t worth the money you invested. Where and how can you repurpose some dollars?
In the end, budgeting is about opportunity. How many times have you heard someone say, “We’d love to take that on, but it’s not in the budget.” Well, now’s the time to think about building in some funding for new efforts and trimming those that just didn’t fly. Some tips:
Check in on your strategic plan – Take a moment, as a leadership group, to check in on your plan and see where you stand. Have you accomplished certain things or maybe decided to correct course on others? What annual goals does your organization have, flowing from the multi-year plan, that will inform how you spend? Take the time to have a robust conversation about these overarching issues. You’ll be glad.
Look back at your notes – In an ideal world, you’ve kept a really good list over the past 12 months, noting all the things that either hit the budget unexpectedly — causing some frantic shifting around — or that you simply couldn’t do because the funds weren’t there. If you do variance reporting each month or quarter, noting what you either over or under spent, then you’re ahead of the game. This information is like a map, helping you navigate your way through budgeting adjustments. Use these reports to determine what you, first, “NEED to build in this year.” Then, when you’ve completed that phase, you can get to those “WANT to build in for this year” items. Alas, if you didn’t keep good notes last year, then pledge to begin today. And have all managers who have oversight for key parts of the budget join you.
Share your plans – As you get down to the actual details of budgeting, armed with the goals for the year and your discussion about progress against the strategic plan, make sure you keep the lines of communication open among all the people who will submit numbers. Even if you all set out thinking you’re on the same page, it’s really easy for people to veer in different directions once the actual budgeting process begins in earnest. So many decisions are made that you might find disconnects happening that aren’t uncovered until the budget is blessed and in use. Build in budget reviews so contributors can share what made it in, why, and what assumptions were used. It could be that a key project needs to have some supporting funding from a second area. You want to make sure you catch these!
Understand the story behind the numbers – I’ve said this before in blog postings, but I’ve always been taught that there’s a story behind every number. Make sure you know what these stories are about, why you need the funds…and never assume!
As soon as you finish the budgeting process, it’s time to begin taking notes and reporting on variance to budget to stay on top of what’s happening month to month. Keep a copy of your original budget and revise it if you need to. And keep the conversation going. Budgeting never really stops. Done well, you are thinking, throughout the year, both about the budget you are working with today and the budget you will be building next time around.