The typical budgeting process used in today's smaller and midsized companies (all companies for that matter) is an exercise in futility. The process which should be extremely useful consumes significant company resources and has the potential to cause team friction limits business potential.
We should think in the terms of what is possible. Paint the picture - of what that possibility looks like. As in building a house - what the house looks like when it's done. They prepare the blueprint of the individual pieces that need to get done, by who, and when – with the objective to complete the house by end of the fiscal year.
We make assumptions along the way and as things change, we need to re-address those assumptions - quarterly, based on what we've learned along the way. The budgeting process becomes an operating plan that is constantly adjusted.
This now becomes a dynamic process and a powerful tool for strategic growth.
I like the rolling budget concept so as one quarter falls off, we add another quarter to the budget. Then the budget process is a continual process.
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