How can you make budgeting more efficient and less time-consuming?

The amount of both free and paid tools or online files for budgeting is endless. What I would say is more important is spending the proper amount of time working on the initial budget so that routine tweaks and adjustments do not become a major hassle down the line.

Fixed forecasts and budgets may seem like a good idea at first, but they can lead to faulty and costly decisions. As business performances change over time, it is important to factor in these changes and understand how they will affect a business. Holding employees to metrics based on out-of-date information is counterproductive and frustrating. Instead, building flexibility into budgeting and forecasting can lead to more accuracy and better results for business. Outdated information holds back from making intelligent business decisions. Every business needs to have a budget in place to keep track of its finances. However, a budget is only useful as it can accurately measure performance. That's why it's crucial to set a realistic budget.

Stay on top of the numbers in your business with clear goals that you can work towards! Set SMART goals to enhance budgeting efficiency. Define specific, measurable, achievable, relevant, and time-bound objectives aligned with your vision. This approach aids in prioritizing budget decisions, allocating resources wisely, and monitoring progress effectively.

Set SMART financial goals: Specific, Measurable, Achievable, Relevant, and Time-bound goals will keep you focused and motivated. Review regularly, but not obsessively: Weekly or bi-weekly reviews can help you stay on track without getting bogged down.

Don't think of budgeting as an event -- it's an ongoing process. I like two sets of numbers. There's the budget that you finalize heading into the year, and then there's the forecast that you revise periodically (I like quarterly). Every time, assess how accurate you were and try to make that number just a little bit better.

There are certain pros and cons to team involvement on budget projections. What would be helpful to ask certain department leaders (i.e. head of marketing) what they would expect certain campaigns and tools to cost so you have general awareness - this is assuming you have limited exposure to that aspect of the business. Ultimately, you will want to work with your accounting department/CFO to establish the final numbers. If you do not have one currently, you can allocate a few days to learning the essentials of budgeting based on your industry and scale, and block off additional days to work on doing the work. Review how you are performing relative to your budget on a quarterly basis, and monitor working capital on a monthly basis

Depending on the size of your business, allocate 10-15% to this flexibility account (how you name it is subjective since your budget is an internal file). This range will still be less than 1/5 of the allocated budget, and if you are doing a good job then that should indicate that the business is positioned for optimized OpEx & CapEx.

My favorite mechanism for flexibility is a discretionary account. Leave a chunk of money available to take on an unplanned opportunity or adjust for something that turned out more costly than anticipated. This is also a powerful tool if you use it regularly. At the end of the year you can analyze your expenses from the fund and use that information to improve your budget next year.

In the M&A space, your head would spin if you saw how much time goes into creating an initial budget which likely would need to go through board approval - I have seen this process take as long as 3 months. I am a huge fan of efficiency and reducing time spent on areas of the business not tied to customer acquisition and retention, but not at the expense of going significantly over budget and running into cash flow issues. Cash flow management is typically THE biggest stated reason that small businesses close down, even when they are profitable based on their Income Statement. Take the time to get this right, and the revisions along the way will be streamlined

To make budgeting more efficient and less time-consuming, consider: 1. Adopting budgeting software: Utilize tools that automate processes, streamline data collection, and facilitate collaboration among team members. 2. Implementing rolling budgets: Instead of creating annual budgets, update budgets on a rolling basis, allowing for more flexibility and responsiveness to changes. 3. Prioritizing key areas: Focus on allocating resources to critical areas that drive the most value and profitability. For example, a technology startup could use budgeting software that integrates with their financial systems to automate data entry and generate real-time reports, saving time and improving accuracy in budgeting processes.