Fudget, Bludget Have You Got a Budget?

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Pity poor old Budget – just say the word and your eyes glaze over…
For starters, he’s got a lousy name. Listen to yourself say “budget”. Can you hear that it even sounds a little bit short and irritable?

Then there is what everyone else says about him – we might never have even met the guy, but we still think of him as very restrained, numerical, tight-fisted and dull.

And of course there is the blame factor – when in doubt blame it on Budget.

“We can’t do that it’s not in the Budget”

Then if we are not blaming him, we are ignoring him – when did you last give him so much of a sideways glance?

Worse still, if we don’t ignore him, we tease him mercilessly by spending one week a year being his devoted slave and giving him our full attention and then when we have had enough of him we just whack him in a drawer and starve him for 51 weeks.

Yes, poor old Budget. Why would you even have one?
Why indeed.

I think the trouble with Budge,t is that he is terribly misunderstood. But if you peel away the layers of ugliness, there really is a swan lurking in there.

First of all, he is easier to manage than most employees. He never asks for a pay rise, he won’t leave you to go to a competitor, he’s available 24/7 and he never complains;

Secondly, he can actually help you grow your business;

Thirdly, he can help you improve your performance;

And fourthly, he can help you free up some time.

I sense you don’t believe me…

So how can Budget help you grow your business?

Businesses only grow because they plan to grow. I don’t think I have ever met anyone who has told me that they want next year to be a mirror image of this year. No, most people tell me that they hope to grow by some amazing percent. And the problem is in the word “hope”.

They don’t plan for growth, they hope for growth.

If you really want to grow, you need to plan to grow. You need to visualise what your business will look like in a year’s time, plan the steps you will need to take to achieve that and then turn this wonderful picture into numbers. This is creating your Budget.
Budgeting is actually a very creative and aspirational process. It’s your plan for a great year written in numbers, it’s your path to success.

It’s just such a shame it’s got a dull name.
And how can Budget help you improve your performance?

If you want to grow your business, you will need to be a bit creative and do some things differently. Now as is the wont with experiments, they are not all going to work. That is fine and it’s a fact of life.
What is not fine, is when you don’t realise that the experiment isn’t working until 18 months after you started it.

If you think that sounds a bit far-fetched, consider this:

» At the beginning of the year, refreshed and full of enthusiasm, the CEO initiates a new way of doing things.

» After month 1, the CEO looks at the business’s results. They don’t look flash, but then it will probably take a while for the benefits of the ‘new way’ to flow through.

» After 6 months, the results still don’t look great. The CEO thinks it must be the bookkeeper – she really is hopeless at keeping everything up-to-date.
» After a year, the accounts look a bit ropey, so the CEO sends them off to the accountant to be sorted out.

» After languishing with the accountant for a further 6 months the accounts are finally completed and returned to the CEO.

And he gets a terrible shock.

» The results are dire.

» The experiment didn’t work.

» Worse, even if he changes tack today, the experiment will have dented profits for a full 18 months.

Of course Budget isn’t going to help you improve your performance single-handedly but if you pair him up with good monthly management accounts, then between the two of them they will be able to show you where things aren’t going as planned and then you can take quick corrective action.

Budget is the perfect partner for the experimenter, innovator and entrepreneur within you.

Even if it does have such a dull name.

And can budget really help you free up some time?
Well yes, he’s actually very accommodating. As well as saving you time understanding how your business is performing, he can also save you time predicting the impact of changes in your business environment.

Business changes daily, a fact that you can either ignore, or try and quantify. Assuming you are not of the ‘ostrich’ mentality and that you do want to quantify it, who better to use to help you than Budget.

After all, once you have got him in great shape during your planning process, he is ripe to play with all year round. You can jig him around a bit and put different scenarios into him and see what the outcome is. Best of all – he does it so quickly.

Be prepared though… Budget is a straight-talker – you won’t catch him glossing over the unpleasant bits.

Dull name, but slays the game.

Now before I finish extolling the virtues of Budget, a word of warning. When God created Budget, he essentially created a rather skinny beast, so your Budget will need some nurturing and nutrition and flesh on the bones if he is going to be of any help to you.

Why don’t you get your Budget out right now and take a look at him. Is he strong, healthy and useful, or does he look like one of these?

  • Bludget – What budget? There is no budget because it’s just too darned hard work.
  • Fudget – A piece of fiction, fudged to give you the answer you are looking for, bears no relation to real life.
  • Nudget – Copied from last year’s actual results and nudged up 10%.
  • Dudget – Completely useless dud, a budget that is prepared and put straight into the drawer never to see the light of day again.
  • Mudget – Overcomplicated and completely incomprehensible. As clear as mud.
    Pudget – Fat. Expenses are way overestimated so you will always meet your profit.
  • Sudget – Bubbly and frothy. Looks great but lacks substance. Or is he:
  • Judget – A jolly good sort brimming with careful thought and judgement.

So give Budget a chance. Treat him well, let him help you grow your business, manage its performance and give you more time and he will make a great right hand man.

You might just want to change his name.

Have you thought about forecast?

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