Better Planning and Budgeting (Part I)
It’s fall! The leaves are turning colors, the weather is cool and crisp, and the days are growing shorter. Many people are starting to make plans for the upcoming holidays. For many businesses, it’s also time to start planning for next year. Does your company have its own planning and budgeting process?
I’ve worked with many business owners who have never created a forecast or a budget. “My business has been very successful without one”, they argue, “so why should I waste the time and effort?” If you’re one of these people, ask yourself this: How much more successful could you have been if you had a planning process? What opportunities did you miss? What missteps could you have avoided?
Many people disdain budgeting because they think it will tie their hands and limit their ability to be spontaneous and react to situations as they arise. Others believe that their business is so fluid that they scarcely know what’s going to happen next week, let alone next month or next year.
In my opinion, it’s even more crucial for those types of businesses to engage in a planning process than ones that are steady and predictable. A well-implemented planning and budgeting process isn’t just about deciding how much to spend on office supplies, salary increases or new equipment. It’s about taking some time out from the day-to-day activities of the business to step back and think about the future direction of the company – about what’s working and what isn’t – about what new directions or opportunities may be available- and what threats or challenges could be lurking just around the corner.
In the next few weeks, I’ll be writing more about how you can implement a planning process that will fit the needs of your business. I hope you will come along for the ride, and even share some of your own experiences or ask questions along the way.
Next week: How to get started — Who should be involved in the planning process?