Plansmith Blog

Are you really planning, or are you just budgeting?

By this I mean, are you filling out the numbers on a spreadsheet or planning the actions needed to make it a reality?

It’s always gratifying when all the numbers come together in a neat package showing expected growth and earnings for next year. And, there were likely many contributors who verbally expressed their goals and plans on how they are going to reach them. The compiled financial targets are then presented to and accepted by the board, and your monthly comparisons begin. Budget “predictions” are compared to reality. Variances from “budget” are explained, and business continues as usual. In essence, that’s budgeting.

In the face of complexity and uncertainty, human instinct seeks order and guidance. A playbook, whether etched on ancient clay tablets or stored in modern cloud servers, provides this very structure. It transcends a mere collection of rules; it's a living document, a distilled wisdom of past experiences, offering a roadmap for navigating future challenges. The benefits of a well-crafted playbook are manifold, weaving their magic across both individual and collective endeavors.

Each January, we love to set resolutions. We painstakingly choose a lofty goal or two and optimistically embark, declaring, “this will be THE year for change!”.

Unfortunately, we often lose steam and quickly return to what is comfortable. For lack of a better term, we fail. We fail to change our approach and to reach our goals.

Although we develop software to mathematically convert ideas into measurable outcomes, we have always viewed Plansmith as an education company. Not education as in ‘a + b = c,’ but in the way relationships and behaviors drive a financial outcome. This year, we are introducing a new educational solution called Budget Playbook. This online tool connects vision with purpose and execution to help you reach your budget targets. At Plansmith, we use Budget Playbook to dive into the relationship between ideation and plan execution to foster communication and drive better results.

Plansmith is a planning company, as our name implies. For 50 years, budgeting has been what we’re known for. We get a lot of questions about our top budgeting advice, and as we kick off a new year, it’s the perfect time to offer some fresh tips for successful budgeting.

Though we certainly suggest using a robust budgeting solution like our Compass software, this advice applies to any process. We understand many organizations still use spreadsheets or outdated software, and that may work for them because they’re used to it. However, quality planning software makes budgeting much easier, more accurate, and more approachable for all parties involved – including the board during presentations.

So, what are some realistic tips for effective budgeting?

During the Middle Ages the town controller or accountant would show the citizenry how much was in the town’s “bouge,” a leather bag or wallet. With this knowledge, they would decide how best to spend it to cover the town’s expenses. Eventually, the term became the “budget” and was adopted by various enterprises to control expenses. Since not all expenses are immediate, the idea of forecasting revenues and expenses slowly entered the picture. However, expense control remained the primary objective. Hence the saying familiar to all of us: “That’s not in the budget.”

A budget without a Playbook is just numbers on a page.

But many managers say they just don’t have the time or resources.

Plansmith’s Playbook is a simple online platform to help you create clearly defined initiatives, track progress, and reach your targets by creating an action plan for your budget.