the difference between budgets and plans

Pop Quiz: The Difference Between Budgets & Plans?

  1. September 15th, 2017  | 

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Published in Strategic Planning

As we move into the final quarter of 2017, how will you and your team begin to lay the groundwork for next year?

Take 60 seconds to answer these 3 questions to see if your plan for next year will fail before you can say, “Happy New Year!”

Do You Budget, or Do You Plan?

1) Will you gather your team to plan for next year, or ask your direct reports to submit their plans and budgets to you directly?

2) What’s the biggest, most persistent problem you have failed to solve in 2017?

3) Which comes first, the new budget, or the new plan?

Answer to Question #1: If your direct reports are submitting their plans and budgets to you directly, you’re missing out on one of the most important components of planning: developing buy-in for the plan. Half of planning is an intellectual exercise. The other half is emotional. Without collaboration, compromise and across-the-board buy-in your plan will go nowhere fast.

Answer to Question #2: Until you develop a plan for solving your biggest problem, and until you make that plan your #1 priority, you are wasting your time planning. The key to solving the problem is approaching it in a step-by-step approach:

    • Gather data so you are debating and basing decisions on facts, not opinions.
    • Gather your team to get their input on the data and possible options for moving forward.
    • Gain agreement on the best option for moving forward.
    • Assign responsibilities, desired outcomes, performance benchmarks and deadlines.
    • Schedule accountability meetings at appropriate intervals.
    • Execute.
    • Adapt activities based on performance.

Answer to Question #3: If your answer is “new budget” you have fallen victim to one of the most common strategic planning mistakes leaders make. It’s tempting to start the planning process with the budget because numbers matter. But when planning is approached as a budgeting exercise, the tendency is to prioritize costs over ideas. When your plan begins with a budget, your team begins by reviewing “the givens:” existing people, processes and programs.. Before you know it, next year’s entire budget is allocated.

Now imagine a planning session that starts with creating a new plan to address your biggest problems and opportunities. Once you’ve identified your priorities, take a fresh look at your budget. You could always help stretch your budget further by finding new ways to save money, such as using a Zoro coupon to help bring the cost of office supplies and B2B expenditures down, thus giving you the option of spending more on other areas of your business. In the case of personal budgeting, financial planning is crucial. For example, if you are planning on getting a new car, you would probably make use of an invoice price calculator to plan the budgets accordingly.

I’m not telling you to avoid reviewing your budget. On the contrary, budgeting is vital-but a successful planning process requires trust first, planning second, and budgeting third. Strategic Planning is not easy. It requires open, honest communication. Starting a fruitful discussion can sometimes feel like pulling teeth without a little outside help, but it can-and should-be exciting. If you’re not sure how to set your next planning session up for success, give me a call or email me. Don’t let your budget constrain your company’s future.

Plan for change and budget accordingly.

About the Author: Greg Bustin advises some of the world’s most admired companies and leaders, and he’s dedicated a career to working with CEOs and the leadership teams of hundreds of companies in a range of industries. He’s facilitated more than 250 strategic planning sessions, he’s delivered more than 600 keynotes and workshops on every continent except Antarctica, and he coaches leaders who are inspired to take their career to the next level. His fourth leadership book— Accountability: The Key to Driving a High-Performance Culture (McGraw-Hill) —is a Soundview Executive Best Business Book.

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