So you’re moving along in your business, planning ahead and following up to stick to your budgets, and suddenly a great opportunity appears. You’ve spent the budget already. Do you overspend to chase that new opportunity?
Hint: I’m sure there’s no good general answer to that question. I think you have to answer it by looking at the specific case.
Much as I believe in business planning, I’ve never believed in the plan as constraint or chain and padlock to keep you from moving the budget suddenly to jump quick for a special opportunity.
It’s that contradiction between planning and opportunism that led me to develop the concept of “a good spend.” In the years I’ve been running a business, I always had budgets, and I always tried to manage with budgets; but I also completely understood that sometimes the opportunity is more important than sticking to the budget.
Is it a good spend? Does this project offer attractive odds of good results? Is it likely to be worth it? Are we going to regret not doing it? Can we find the money somewhere, like taking it out of some other budget, saving it from somewhere else, or even borrowing it? Then it’s a good spend. Do it.
Budgets are plans, and plans are about planning, which is about management, steering the company, and controlling your destiny. The goal is better business. The budget serves the business, and not vice-versa.
Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and a co-founder of Borland International. This post was originally published on his blog, Planning Startups Stories, and is republished here with permission.
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