13 Mar 2022

Why Build Budgets?

BY: Craftsolutions

Why Would I Ever Need A Budget?

Building a budget feels like building a torture machine from the dark ages, and then becoming its victim! You have to meticulously plan every detail of your business and then, in a few months, you have to explain why reality is different. This definitely sounds like torture to me! So why take on the task?

Plus, a budget is a purely theoretical exercise. It will never be accurate because it is simply a projection, a vision of the future. Why should you put all that work into something which can never be correct? It certainly appears to be a futile exercise, right?


However counter-intuitive it may sound, budgets are your best friend in a world dominated by uncertainty. Your budget is the map that you and everybody related to your business should use to safely navigate the tumultuous waters of everyday business life.

Creating a relevant and motivating budget is your opportunity to literally create the future of your business. It’s the moment when your business vision materializes into this world and allows you to shape your company according to your will.

I Am Afraid Of Creating Expectations

Yes, I feel what you are saying! And this is why building a budget is such a delicate and difficult task. You need to balance out what you expect you can achieve with what others expect you to achieve. This makes a budget motivating and it pushes everybody to give their best. This is the way tremendous value is created for you and your business.

Moreover, think of this as maybe the only opportunity to align everybody’s expectations to your vision of your business. Think of it as the moment when you can paint a vivid picture of your next big project and make everybody be excited about it. If you nail it, it can be like a rocket boost for you and your business, propelling you to unimagined heights!

Budgets Make You Proactive

Have you ever felt uncertain about your business’s future? Have you ever felt like a leaf blown by the wind?

If you ever did, then it’s time for you to never feel like that again in your life! Believe it or not, this is possible with a budget as your guide.

“A budget is telling your money where to go, instead of wondering where it went.”

– Dave Ramsey, Host, “The Dave Ramsey Show”

When you build a meaningful budget, you take a lot of uncertainty out of the picture. Having such a plan means that you put intention first into any action that you take. This intention is to steer your company towards success by following the plan laid ahead. When you have a budget in place and put in a process to regularly review it, you can proactively lead your company and be confident while doing it.

Budgets Are Your Measure

There are also many other benefits of having a plan. Budgets and business plans are what venture capital, private equity firms, banks and other investors use to value your business. These people are many times VIPs for you and your business, so treat them properly and give them reasons to see your business as great as it really is.

“Don’t tell me what you value, show me your budget, and I‘ll tell you what you value.”

– Joe Biden, President Of The United States

Think of a budget as your chance to showcase your vision and your business. It’s the stage where you can show everybody how amazing the future of your business will be.

So How Do You Create A Motivating Budget?

The first and most important step in creating a meaningful and motivating budget is to get all managers involved. Only if your managers feel they get to take part in the process of shaping their and the business’s future, will you be able to make them feel motivated. This way it will not feel like torture for them, but instead, it will make them feel like creators. This is an extremely powerful way to keep them engaged and at the top of their performance.

The second most important step is to build your budget on a rock-solid analysis of your past financial performance. Go deep into the details, understand what is driving performance, and use this knowledge to build a relevant bottom-up budget for your business.

Use Automated Tools To Build Your Budget

Another significant aspect is the tools you use. Sure you could use multiple spreadsheets to gather the budget from every manager and then consolidate it. But this will be very difficult because everybody has a different way of thinking and you will end up with very “colorful” spreadsheets which are a nightmare to consolidate.

So using an automated tool that is specifically designed to help you create and consolidate your budget is extremely helpful. This is how your managers will have the freedom to build and propose their own budget for their business area and you will be able to easily review, modify and consolidate the whole thing.


Building a relevant and motivating budget is crucial for your business’s success. It’s what keeps everybody related to your business aligned, engaged and at the top of their performance. Don’t be afraid of creating expectations, but instead grab the opportunity to showcase your business’s future and to shape it according to your vision.

You might also be interested in:

Why Bother With Managing Your Finances?

Why Analyze Financial Reports?

Why predict Cash Flow?