Why creating annual budgets isn’t a waste of time
Image by Lubo Minar via Unsplash
People may be surprised to hear that the objective of annual planning shouldn’t be to arrive at accurate numbers. Instead, it’s to have all teams take a step back from the short-term thinking dictated by daily firefighting.
When the planning process is run well, you‘ll get a deep investigation of what makes the company successful in the long term.
The results:
➣ Existing strategies are adjusted to changes in the environment
➣ Plans are developed to meet new customer needs
➣ Trade-offs are aligned between departments
➣ Smart risks are being taken
➣ Contingency plans are developed to reduce reaction time to the inevitable disruptions
Those results make it worth it for the entire leadership team to take time out of their day to spend on the annual budgeting process.
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