It’s everyone’s favorite time of year! I’m not talking about Pumpkin Latte (gross) season or Halloween (awesome); I’m talking about the budget season. That time of year when we make stuff up based on the unknown, unpredictable, and unreliable variables and then get to be held accountable for them next year! Fun!
To help alleviate the pain a bit I’ve put together a few tips for you.
1. Make a list, check it twice
2. Add 10%
3. Operational expenses versus capital expenses
4. Speaking of consultants
You must find the balance between what you KNOW you can do, what you THINK the organization needs, and what you suspect they will actually fund. First, cut out everything that is an absolute fantasy. Take out anything that will not be funded based on the current strategies. Take out anything that you couldn’t possibly find people to do the work for. You must curate a list of things you know you can achieve, even if you know sh!t will get cut some more. Only propose what you know you can do with a little stretch.
Once you have a list you can feel good about, add a contingency amount of 10%. I know a lot of people will tell you to add more but I think that’s a mistake. Executives expect a contingency but if they suspect you are just padding your budget, they will cut you faster than Dexter on a bad day. You should be able to rationalize the investment and if you can’t do that don’t expect your budget to be cut rationally.
I’m no finance wizard but If I had a dime (and a good investment strategy) for every time I’ve had the conversation about operational vs capital I would be relaxing somewhere with a book and a steaming cup of French Roast, not writing budget tips. The general rule is if you’re building something with a start and end date (i.e., implementation) you can capitalize it. The rest is up for debate for the pros. Base the need for staff and the request for consultants grounded in reality-- not gaming the op vs. cap convo.
Hi, my name is Laura and I’m a consultant (hi Laura). Good consultants will tell you that we are only helpful in a few specific scenarios. An implementation such as a new piece of software, a specific project like a new data repository (please don’t call me if you’re doing that), filling gaps for resources until they are hired, or strategic assessments where you don’t have the time or expertise to complete. With a few caveats, consultants can be the most successful with a well-defined set of goals, internal resources to serve as liaisons, and perhaps most importantly, an end date. Even if you’re not sure how you could use them be sure to budget for some consulting support. Many of us will help with a high-level estimate. #hint
Once all the work for budgeting is done and you know what you’re on the hook for next year the most important thing you must do is deliver on everything you signed up for. If you can’t you better have a damn good reason why. This is why step #1 is so important.