>> Listen to the audio version to find out additional commentary about the topics discussed in this post!
This is part of a series of posts that explores the “Adaptive Digital Strategy Framework”, an operative guide that I created to plan, execute and manage online strategy programs more effectively and efficiently. Each of post of this series comes with an audio podcast in which you will find the audio version of the post with additional audio commentary about the discussed topics. The name of the podcast is “FIR On Strategy with Andrea Vascellari”.
A budget is an invaluable tool to help us prioritize our spending and manage our finances. Simply put, a budget is a detailed summary of likely income and expenses for a given period. It provides a concrete and organized breakdown of how much money we have coming in and how much we are letting go.
If you are listening to this episode you probably work in communications, design and development, PR or marketing so chances are that when you think about budgets you are looking at several different disciplines like paid advertising, content, product/service marketing, public relations, branding or creative.
To be honest we could talk about budgets all day but as usual it’s not an easy job to research, select, prepare and share with you valuable information that can help you plan, execute and manage your strategic communication plans. So today we are going to focus mainly on two things:
- The important roles played by the budget.
- A series of tips that will help you define your budgets.
The budget’s roles
A strategic communication plan is the result of a process that starts by analyzing the strengths and weaknesses of an organization in relation the present and future characteristics of the environment in which the organization operates. Then it defines the objectives that need to be accomplished within a determined time frame and it specifies a series of potential strategic and tactical alternatives able to achieve the objectives. Among these options, the process chooses the optimal ones specifying the relative resources required to accomplish the defined objectives.
The budget connects to this process specifying in detail the resources that are needed and it allocates them in the different functional or divisional areas within the organization. So we could say that the budget has two important roles, organizational and economical:
1) Organizational: The budget can be used as a tool to allocate, in the short and long term, the resources to achieve the defined objectives, so it’s vital for the organizational stability – Obviously, this distribution of resources is defined by the management group that holds the decision-making power in the organizational control.
2) Economical: The budget supports several economical decisions regarding the different functional or divisional areas of an organization. Basically it offers a structured decisional model based on a series of alternatives that helps us coordinating the different decisional areas and it allows us managing the complexity of the management itself.
I want to share with you 6 tips that are very important, not only if you are running projects that involve “digital” but especially if you are working on a different initiative that goes a bit out of your main area of expertise.
- Keep your available budget in mind throughout your entire planning process. Whether you are a large or a small organization, monitoring your budget will help you identify excessive expenditures and it will allow you to adapt quickly to achieve your objectives as the financial situation changes.
- Divide your budget in projected and actual expenses. The projected expenses are the estimated costs – essentially this is the approximation of the cost of your initiative – and the actual expenses are costs that actually incur once you will start to run your project. By monitoring projected and actual expenses you will be able to understand when something is not going as planned and it will allow you to address immediately eventual pending issues that might arise during your initiative.
- Prepare a structured budget plan. Depending on the nature of your project you might want to structure your budgets monthly, quarterly (Q1,Q2,Q3,Q4) and yearly. Structuring your budgets will help you to monitor the current situation and also to predict future income and outgo to plan for any potential temporary shortfalls in revenue.
- Review your budget periodically. It’s important to review your budget on a regular basis to make sure you are staying on track. After the first month take a minute to compare the actual expenses versus what you had created initially in the budget. This will show you where you may need to change your budget.
- Be as detailed as possible. If you want to run successfully your initiative and achieve your objectives you have to provide as much detailed information as possible. Show where the money is coming from, how much is there and where it is all going. This is not just about listing your expenses, you must be able to make a case and justify them. Creating a budget may not sound like the most exciting thing in the world to do, but a good budget will help you keep the financial structure of your projects in order and it will help you also getting your proposals approved.
- Ask the masters. After creating your budget, perform an additional research to fill the gaps, review and edit the budget where it’s needed. Then reach out to experts who are masters in their discipline so they can help you finalize the different items you listen in the budget.
Over to you
This is based on my experience, what would you adjust based on yours? What do you think about it? Is something missing? Looking at the sector you are working in, would you approach this differently? Let me know in the comments.