Justify Your Numbers When Creating Budgets

Budgets are not something to be created in jest or in the last minute. Sketchy numbers and quick fix cramming is not the way to go when it comes to putting forward a financial plan. I have seen managers fail to justify their budgets and this leads to embarrassment and/or lay offs. Start your budgeting project early and come up with itemized numbers that can be supported.

I once worked with someone in training and they asked me how they could justify their department. My answer was they would have to show how they are contributing value and that their budget was justified in order to continue to bring that value.

The person was not well schooled in common business practices and wasn't able to use metrics to support the value of her department and wasn't able to justify her budget. At the end of the day, she and her employees were laid off to allocate resources to other pressing areas.

Likewise, I have seen managers put forward budgets with sketchy numbers that are not supported. When they were probed, as most certainly will happen, they were hard pressed to find justification for their numbers making them look less than professional.

The best advice I can offer on budgets is to start early, justify the numbers, make sure that your budget actually supports your goals. They should be in alignment with your strategic plan and take into consideration the necessary research needed to create a sound and supported position that can be discussed in detail. Don't wait until the last minute to complete your work because someone will go over it with a fine tooth comb.

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