We’ve talked about the importance of a budget and even how to start building one. Now that you are comfortable knowing your budget is a roadmap, I must share the news that sometimes you need to veer from it.
A roadmap, a framework, a plan. Call it what you will, but there’s one constant: We don’t go back and rewrite it. The budget is a touchstone that stays as is. But this doesn’t mean that just because we have a budget that’s “set in stone,” we can’t change our course and direction.
Let’s say your budget says we’re supposed to do $10,000 of revenue every month this year and then we find out very early in the year that that’s not quite how our year is going to go. WE need to re-evaluate, pivot, whatever you want to call it. We should probably hold off hiring the people we thought we were going to hire and maybe put a pin on moving into the big new fancy office even though that’s what we budgeted for.
You have to keep tabs on what’s really happening and rewrite your thinking based on your current state of affairs — not what you thought was going to happen four months ago when you put the budget together and not what you hope is going to happen when you close your eyes and go to sleep at night.
I find that people generally go in one of two directions in the budgeting world.
First there are those who hold themselves to their budget absolutely: “We’ve got to follow it to a T because that’s what we planned, and screw what’s happening in real life because the budget is the Bible.” And you don’t want to mess with the Bible, but you may need to reinterpret.
Then you’ve got folks who go the other direction, which is: “Screw the budget. I don’t care that we put all this work and energy and thought into how we wanted to shape this business, because that’s not what’s happening now.” Honestly, that’s reckless.
We always want to use the budget as a touch base. It doesn’t have to be set in stone, it can be “in the spirit of.” No budget police are going to show up at your office. When we put that plan (your budget is just a plan!) together, it was based on an understanding and ideas. At some point in time, it represented what we wanted from our business and how we wanted the roadmap to look. You can’t just throw the whole thing out because reality doesn’t match. Redo your forecast based on reality, but make sure it’s still built around the bones of your budget.
Confused about how to use your budget as a touchstone, while adapting to the realities of your day-to-day business? Good. That’s why I’m here. Let’s talk it through together.