The budgeting cycle

Since it is now the beginning of the new fiscal year for many businesses and budgets have been locked down for the year, what happens if priorities need to change in the middle of the year? What if a new technology comes out that changes your business environment, will you have money to invest? What if your customer base decides that they want something new, will you be able to adapt?

The problem with the typical budgeting cycle is that it takes too long and is not flexible enough for changes in the business environment. It is, of course, very important to plan investments for the year, but it is also important to have enough flexibility to run your business. It might be prudent to have a quarterly review of the budget to ensure that it still matches up with your objectives and priorities. Why not just have four budgeting cycles each year? You may scoff at this because you think that the budgeting cycle is such a process that it takes too long to do it four times per year. The easy answer to that: make your budgeting process faster and easier so that it can be done more frequently. Remove the politics and the positioning and focus on facts–where are the opportunities in the marketplace? What do your customers need? What are your company's strengths?

Budgeting does not need to be a process that takes three months and everyone dreads, it should be looked at as an opportunity to allocate resources to the areas of the business that present the greatest opportunity for growth and success.

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