Picture this: You’re eating a banana, but you skip peeling it and bite right in. Sure, it’s possible to do these things, but in my mind it’s far from ideal. The same applies to running a business with a budget but no strategy.
You can have a budget without a plan to back it up, but much like eating a banana with its peel on, it won’t be very satisfying and it probably won’t give you the results you’re looking for. In fact, it could leave your business with an aftertaste of confusion and missed opportunities.
In this blog, I’ll break down the consequences of budgeting without a plan, and show you how to create a winning combination by blending your budget with a well-thought-out strategy.
- Setting yourself up for a bland outcome
A budget without a strategy is like biting into that banana with the peel still on. Sure, you’ve got the banana (your budget), but you’re missing out on the real value underneath (your strategy). Your budget may lay out how much money you’re expecting to spend, but without a plan, you don’t have a clear idea of why you’re allocating funds the way you are or how those expenditures will lead to business growth.
For example, a business might budget $10,000 for marketing, but without a strategy that outlines which channels to use, how to track results, and what the goals are, that money is likely to be wasted. It won’t be very effective without the right layer of strategic thinking.
- Why it’s not recommended: you miss out on bite-sized action
Ever try to eat a whole meal in one giant mouthful? It’s overwhelming and impractical. The same goes for trying to achieve your business goals without breaking them down into actionable steps.
When you have a budget without a plan, you’re essentially attempting to swallow your goals whole without taking time to figure out how you’ll get there. A budget might tell you where you want to go financially, but a strategy breaks it down into bite-sized actions that make the big picture more digestible.
For instance, if your budget says, “We want to increase profits by $50,000,” a strategy answers the key question: How? Are you focusing on product expansion, increasing prices, or improving operational efficiency? Without this roadmap, it’s easy to lose track of progress and end up spinning your wheels.
- Unnecessary waste and missed opportunities
Picture this: you’ve got the ingredients for a gourmet meal, but no recipe to follow. You might overcook the steak, under-season the vegetables, or waste time and ingredients because you’re not sure what to do next. This is what happens when you create a budget but don’t have a strategy to guide it.
For example, budgeting for staffing costs is essential, but without a strategy that outlines when to hire, how to onboard, and what roles will be the most effective for growth, you could easily overspend or hire for the wrong position missing out on the potential to scale efficiently. In business, a lack of planning can result in wasted resources and lost opportunities, leaving you far from your intended goals.
- Trying to skip the peel: The risk of oversimplifying
Having a budget without a plan is risky because it oversimplifies the complexities of running a business. When you skip the planning stage, it’s like eating a banana with the peel on—you’re overlooking important details that can make or break your success.
Let’s say your budget allocates funds for expanding into a new market. Without a strategy in place to research that market, understand customer behaviour, and adjust your product offering accordingly, you might end up wasting your budget on a venture that wasn’t ready to launch. It’s essential to peel back the layers, analyse the details, and make informed decisions that maximise your chances of success.
The best approach: forecast +strategy
The key to financial success is not just in setting a budget , but in pairing it with a comprehensive strategy. Budgeting gives you the “what” the numbers you’re working with. But strategy gives you the “how” the practical steps to get the most out of those numbers.
Think of it like crafting the perfect meal: your budget is the list of ingredients, but your strategy is the recipe. You need both to create something successful and satisfying.
Here’s how to approach it:
- Start with the end in mind:
What are your business goals for the next quarter, year, or five years? Your strategy should clearly outline these objectives.
2.Break it down into bite-sized chunks:
A good strategy will divide big goals into smaller, manageable actions. This way, you can take it one step at a time, much like eating a meal one bite at a time.
3. Allocate resources wisely:
Your strategy should ensure that every dollar in your budget is allocated where it will have the most impact whether it’s marketing, staffing, or product development.
4. Monitor, adjust, and adapt:
A strong strategy includes regular checkpoints to assess whether you’re on track. If your results don’t align with your budget, adjust your plan rather than blindly following the numbers.
The power of combining budget and strategy
Just like you wouldn’t eat a banana without peeling it, it’s not advisable to create a budget without a strategy. By blending the two and creating a realistic budget with well crafted effective strategies, you set yourself up for sustainable growth and success.
