In September, organizations get to work on their budgets en masse. Not because they enjoy it so much, but because they have to: the government is cutting subsidies, inflation is rising, and people are cutting back on their extras (read: charities are the first to go). Time to get the finances in order — just to make sure there is enough budget for all plans and staff.
Easier said than done, because most entrepreneurs get the jitters from spreadsheets. But if you neglect your finances, you’ll be left dealing with the bumps and bruises later. That’s why this blog gives you a few smart tools to build your budget without panic. The trick? Seeing your budget as an extension of your day-to-day tasks — and not as a dry, number-crunching exercise.
Plan for the future, not the past
Many organizations start their budget planning by simply looking at what they spent last year and comparing that with the plans for the coming year. But that’s a pitfall: if you only build on your current budget, you miss the chance to truly innovate or tackle problems. It’s smarter to take a step back and start with the question: what do you want to achieve as an organization? And then: how are you going to do that? That “how” is what it’s all about.
Specifically: think ahead. Build your budget around the practical actions needed to take your organization to the next level. The best way to get there is to plan your finances over the longer term: a three-year budget instead of a one-year budget, for example. Each year, you evaluate and adjust for the future. This turns budgeting into investing: you put time and money into it now in order to reap the rewards in the long run. So you don’t build your budget based on your costs or income, but based on what you want to achieve.
Look beyond subsidies
Another question that typically surfaces when budgeting is: “Will the government even want to fund this?” A valid question, but still only one piece of the puzzle. Because there are multiple ways to secure your funding. Think, for example, of your end customer: they may not be able to pay the full amount, but probably can pay part of it. Or a significant other, someone who shares the same background and feels involved. Compare it to a suspended coffee: someone pays in advance for someone else.
Expand that further, involve bigger players — and, as a last resort, the government. The main goal? A plan for your organization that convinces investors and partners. If you truly want to create value with your organization, then you (and not your accountant) determine the course. Because you have the overview and the vision. The more your budget aligns with your strategic goals, the more control you gain over the future. Your budget then becomes a mirror: are you really doing what you intended to do? This turns budget building into a strategic tool that supports your work, instead of a stressful task you dread every year.
Start on time
Timing is everything. That goes for stand-up comedians, but also for your budgeting. In other words: don’t put it off until the last minute. For many organizations, the budget only needs to be officially approved by the General Assembly sometime between March and May. The problem with that? By then, the new year has long since begun — and you’re actually already behind. If you want to avoid that, you need to approach it more intelligently.
A healthy process starts with thinking ahead. Start in August or September by aligning the plans for the coming year with your multi-year strategy. That is your foundation. This way, you’ll have a first working version of the budget ready by the end of September, and you can ask for feedback on it in October. Then, by November, you’ll already have a working budget that the board can approve.
Halfway through the year, around July, you make a budget update: how are we doing? Where do we need to make adjustments? That update is crucial, because it forms the basis for the next budgeting exercise in August or September. This way, you stay on course and avoid unpleasant surprises. The result: more peace of mind, but also much more control over your strategy.
