The Real Reason to Budget (It's Not What You Think)

10th October 2016

“Plans are nothing, planning is everything.”

That was General Eisenhower - and as the man who oversaw D-Day, he should know. Before the greatest invasion in history his army spent, quite literally, years working out what resources were necessary, consulting 125 million maps (yes, that is the real figure), developing transport arrangements, and training troops.

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But although Eisenhower was speaking in a military capacity, his words are just as relevant to your business’s budget.

Too many businesses fail to give budgeting the care and attention it deserves, throwing together some optimistic figures and then promptly forgetting about them for the year.

I believe this happens because they don’t really understand why budgeting can be so useful.

As Eisenhower was aware, the true value isn’t necessarily in the budget itself but in the process of drawing it up.

Some of the plans he drew up for D-Day needed to be adjusted on the ground – indeed, he very nearly postponed D-Day because of bad weather.  Nevertheless, all those months and years he spent working out exactly what was necessary to win paid off, because the fundamentals were all in place.

He had the right troops, with the right equipment, and the right training.

Putting together a good budget is exactly like that. To really come up with meaningful numbers, you are forced to analyse your business in depth.

Why are you pouring resources into a certain area of your business? Are all these activities really necessary? What do you need in place to achieve your growth goals?  Are those growth goals even realistic?

Only then can you decide on what your final budget will be for the coming year, and how to allocate available funds.

Just like on D-Day, you’ll probably have to make adjustments to your budget almost as soon as the ink has dried (as Harold Macmillan put it, “Events, dear boy, events”…).

But by taking the time to assess every part of your business, you’ll develop a deeper understanding of what’s really going on, and be able to make better decisions even when circumstances change.

So, try not to think of creating and managing budgets as an unpleasant task. Instead, view it as an opportunity – one which could be key to the success of your entire enterprise.

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