Almost everyone wants to save money, but few if any ever want to talk about budgets. It’s a strange paradox. While the idea of a healthy business and extra funds are a clear positive, budgets are associated with negative feelings and actions.
Cutting jobs or programs. Holding off on upgrades and new equipment. Excessive amounts of paperwork and changes. These are the things people think of when they here budget.
This idea has infiltrated people’s minds that an effective budget means you have to hold back or give up everything you want. When done correctly though, budgets can be a great thing that makes your business stronger and your processes more efficient.
Creating a great budget isn’t all about cutting expenses or saying no to everything. It’s about operating at your best while preparing for what’s ahead.
What’s the trick to making that happen? Let’s start from the top.
When and Where to Start Your Budget
Most industry experts will tell you to start your budgeting for the next fiscal year 10 months into the current one. Starting too soon could leave you with insufficient data while starting too late might leave you behind schedule, missing the start of the budget year.
You want to make sure your budget is finished and ready no later than 3 weeks into the fiscal year.
Once you dive in, you’re going to have a lot of data and records to sort through. Rather than go straight to spending, jobs, or programs, evaluate your process itself. Are things getting bottlenecked at some point? Does one area of the supply chain seem to consume a disproportionate amount of funds? What does the timetable look like?
After all, the whole ‘time is money’ concept is especially true in the logistics industry.
By making your process better/leaner/faster, you can make a healthier budget without having to really cut anything out.
Could Someone Do It Better for Less?
As your business grows and solidifies what it does best, you’ll also start to realize what you’re less talented at. Though third-party companies seem like an additional cost, they can often save you money by doing part of the process better.
With the parts of the process that seem to be holding you back, evaluate whether or not it would save money and time to bring in someone else to assist.
Remember You’re Planning for The Future
It would be easy to plan budgets if you knew prices and expenses were going to be the same every year. Unfortunately, they’re not. Look to the past as you plan for the future of where rates, wages, demands, and general costs are heading.
Price tags in logistics are not set in stone. At best, they’re set in mud, and the world is constantly on the verge of raining.
If you don’t know where things are heading, don’t be afraid to ask either. If you’ve moved into a territory you’re less familiar with, you can’t assume things will play out the same as what you’re used to. Instead, reach out to industry insiders and 3PLs to get advice and opinions.
Don’t ‘Make Do’ for the Sake of Saving Money
Once you enter full budgeting mode, you might find yourself turning down all additional expenses. Sometimes it’ll be new equipment. Or hiring a new position. Or adding an additional step or two into your processes.
Spending more on something seems to counteract a ‘good budget’, but sacrificing something you need is only going to hurt your business in the long run.
Sometimes, you have to spend some money. Sometimes, you need new things.
Your Budget is Not Your Dream
The dream you have for the future of your business is an ideal. It’s a near perfect, near impossible outcome of what you’re striving towards. It’s out there in the future, waiting for you to come and find it.
This is not what your budget is. Your budget is very real, very near, and it’s something you need to be able to achieve. Now.
Maybe that’s the cause for all the negative views on budgets. Companies feel that in order to have a good budget, they need to have a mediocre dream. The truth is the opposite, if anything.
Setting and meeting a great budget will only bring you closer to the dreams you have for your business. By putting in the work and making the sacrifices now, you set yourself up to do more later.
So budget wisely. Your dreams are depending on it.