It is December and you are most likely struggling with the budgets and the plans for 2022 (if your fiscal year is the calendar year).

When I became sales manager the first time in 1982 and had to go through my first budget process I was very fortunate to have a brilliant mentor who helped me understand some crucial premises. They have helped me through many budget negotiations and I will now share them with you.

This post is about planning and budgeting in the mature corporate environment. The issues are different in startups and smaller companies and I will cover those in another post.

What defines success?

Success is delivering on your budget again and again. Never come short and never come too high. Stay within the 101-105 per cent bracket. If you come in too low you will be punished and may lose your job. If you come in too high your superiors will be suspicious that you have sandbagged and they will just add on top for the following period, making your life increasingly more miserable.
In sales, success is not associated with anything else than meeting your budget and other fiscal targets. Whether you increase or lose market share is not an issue. As long as you deliver on your numbers you will be forgiven almost anything else.

Success is delivering on your budget again and again. Never come short and never come high. Stay within the 101-105 per cent bracket.

When is a success secured?

Success is secured when you negotiate the budget. The lower the revenue budget and the higher the expense budget you can negotiate the better are your chances of success. The fact is that your options for changing much in the marketplace in a single budget period are slim. Getting a low revenue and a high expense budget is your best insurance for success.

Success is secured when you negotiate the budget.

Document your assumptions

A budget consists of numbers in a spreadsheet. They do not say anything about how you are going to achieve the revenue line and under which assumptions all the numbers were made. You need to carefully consider what you must do to deliver the revenue targets with the expense allowance you have available, and you must write it down with all the details. Whenever someone pushes you for higher numbers or wants you to cut the expenses you take out the plan and revisit the assumptions. First, you fight to avoid the increase/decrease, then you ask for proportional adjustments if you believe that the adjusted targets are achievable.

Be prepared to walk away

Getting and accepting a budget that you do not believe is achievable is like getting the kiss of death. If you meet or overperform you have just proved that you were sandbagging in the first place. If you miss the budget then you will be punished.

Accepting a budget you don’t believe in easily brings you into a psychological state of mind where you burn calories proving you were right. Any indication that you cannot deliver will be used in a self-destructive approach towards failure. As a budget responsible manager in the corporate environment, you must always be prepared to walk away. There is nothing wrong with resigning due to disagreements over the budget. It’s actually much better than being fired for under-performing.

Getting and accepting a budget that you do not believe is achievable is like getting the kiss of death.

This post was published first on 7. December 2021 on hpbech.com.