Yesterday, we presented our budget for approval. As a Canadian, I couldn’t help thinking about our Federal Finance Ministers who always buy new shoes on budget day. Being in a startup, I bought new shoe laces.
Budgets are a strange thing. The actual budgeted numbers are not that useful, but the budgeting exercise when done right is invaluable. It’s all about thinking through the key assumptions and metrics of your business. What are the key drivers? Model them. What people will you need and when in order to achieve plan?
I firmly believe that if you don’t measure something it’s because that thing is not important. Therefore, once your budget is approved, it is vital that you track actual data for your key variables / assumptions. This will help you determine if you were correct in your hypothesis for the business. It also helps you determine whether, as managers, you are making good decisions and predictions for your business.
Our budget is approved now. As one of our investors said: It’s all about execution now…