Budgeting: not a burden to innovation, but a way to brainstorm new ideas
This post is part of a series celebrating SmartSign’s 15th Anniversary. In 15 posts, we reflect on lessons learned, good experiences, and company-wide changes that brought us to this milestone of success. You can view the entire series here.
From Tax Credits.
Budgeting is not a burden to innovation, but a way to brainstorm new ideas
Some creative types balk at the idea of sitting down and figuring out the nitty gritty budgeting parameters of the next new project or business, but Bryan Bowers, SmartSign’s CFO, says that budgeting can be “an essential source of new ideas rather than a hindrance to creativity.”
Entrepreneurs have big ideas. Many set out to disrupt an entire market, particularly those entrepreneurs operating in technology sectors. Even these tech innovators can benefit from creative budgeting processes. Say for example your company has a great idea with high hopes for its future. A product explanation is necessary, but a financial road-map to that fortune is just as necessary. The product might work, but how will the company be successful?
Great products can sell with awesome marketing campaigns and flawless designs, but companies stay afloat with budgets and earnings. Bowers explains, “My role has been to allow our team to bring new products and ideas to fruition by ensuring that the company can sustain these projects.”
Think of budget opportunities, not restrictions
The budget is both an enabler and a limiter. It helps force the company or project leader to define goals, making them easier to achieve. Some see budgets as having a negative impact on creativity because they may limit the scope of new ideas. However, the limit enhances focus on key elements. It lets innovators zoom in on critical aspects that will eventually determine the success of a project. Budgets let you see flaws you’d never think of.
Action Items
Without diving too deep into the budgetary process, here are three important action items:
- Generate a timeline
- Identify costs
- Forecast earnings
It’s very important that these items are realistic. Attainability is often the main barrier to funding, whether from a supervisor or venture capitalist. It’s not fun to chop down a high-minded entrepreneur with comments like, “Can we meet this demand in a year?” Or, “If we don’t meet your time-to-market, we will have no money in three months.”
“What if” scenarios
Generating what-if scenarios is a great way to bring new ideas to fruition. “Business owners like to think we know the market, the product, and all the factors, but in reality things change.” Bowers warns, “Budgeters can prepare for change and look for opportunities both when times are good and when things go badly.”
Often, contingency plans for failure add value to a business or can be enacted much earlier than expected. Examples include outsourcing expertise, taking out loans for expansion, or licensing intellectual property.
Conclusion
Budgets can be tough. They don’t scream sexy innovation and there isn’t often a waiting list to get into the budget meeting. However, they are a great indicator of success and often act as a compass pointing towards vital weaknesses, strengths, and opportunities in a project. Budgets can sculpt a good idea into a masterpiece.