With Budgets, be Your Own Toughest Critic
December 18, 2008
I’m Ed Sullivan, editor of Building Operating Management magazine. Today’s topic is budgeting.
Think it’s always a good idea to put a lot of padding into a budget? You might want to think again.
One common reason managers pad a budget is because they believe the budget will be cut no matter how well justified all the requests for funding are. The padding is actually there to be cut.
This approach creates a problem. If you get quizzed about your slush fund, and don’t have a good answer, your credibility could go out the window. Future requests for funding could well be viewed with suspicion.
Better to be your own toughest critic. Make sure that all the numbers in the budget are solid and be prepared to defend them. You won’t win every battle, but over time you’ll earn a reputation as a straight shooter, an image that can carry a surprising amount of weight when budgeting decisions are being made.
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