The Budget Balancing Act

One tip: How to beat the “Budget Balancing Act”

“We are going to be over so don’t book that out this month.” “We don’t want to carry that cost into next year. Book it now.” Do these sound familiar?

When your measures are one dimensional, you risk your budget owners overlooking the impact that their decisions will have on other areas of the business. The short term focus on balancing the budget will take precedence over the longer term effect.

This is a reaction to being measured on short term outcomes. Nobody likes to see their numbers in red. Especially when they are being judged by their bosses and peers.

The more ambitious the budget target, the more likely other factors will be overlooked.

To remove this budget band-aid you need to measure a healthy mix of outputs and inputs. In my experience, let your people decide which inputs they want to track.

Then ask your people “what was something we didn’t know?”

Analysis should be used for learnings. Not judgements.

You can download the tip sheet here.

One sporting stat

The Tour de France is one of the world’s most lucrative cycling events. This year’s 176-rider field will split a €2.8 million purse, including €545,000 for first place, €220,000 for second place, and €110,000 for third place.

It’s estimated that the Tour de France brings in over €100 million in annual revenue with over 50% coming from broadcast rights.