Budgeting for the New Year can be exciting - especially in the digital realm. But regardless of what type of business you are responsible for, you likely faced a great amount of stress completing this task.
Let's remember why you set an annual budget in the first place.
To Set Priorities
Creating a budget not only allows stakeholders to organize how they want to spend their money throughout the year, but also gives their staff (if privy to such information) clear expectations. By allocating more money in technologies that improve online customer experience, for example, you set the expectation that customers come first in the New Year.
It's imperative to share these priorities and changes with every level of your organization. If your budget is for c-suite eyes only, make sure to distribute these culture shifts to your employees in another form. After all, your employees will be the ones making the actual shifts on the digital showroom floor.
To Project
Another reason why businesses budget, is to project spending. In the new media sector, we talk exhaustively about emerging trends, but the enticing part of the industry is that even the most digitally tuned in must expect the unexpected. The question isn't "will there be a new, all-consuming social media network that I must invest ad dollars in?" it is "when will there be a new..." Let's hope your budget offers enough flexibility - a reserve if you will - to invest resources in the unexpected. This will serve you well in this year, and every year. This isn't a luxury afforded to all, however. But a little can go a long way when your company stays in touch with emerging technologies and opportunities. If your budget is stretched or nonexistent, another possibility is to use what you have. Say you are an email service provider, and a groundbreaking startup has a service you want, but you really cannot afford. Approach the company with a barter proposal. It doesn't hurt to ask.
To Save
Businesses of every size have goals that take money to accomplish. In 2012, 46 percent of online retailers invested in a new e-ecommerce platform (RSR and Bronto Software study). If you are interested in how else online retailers spent their money, check out the rest of the survey's highlights:
- 50 percent invested in a new email service provider (ESP)
- 49 percent invested in mobile applications
- 43 percent invested in website optimization
- 87 percent will put budget toward email marketing this year
For budgeting businesses, these projects may have been paid for in two ways: by skimming from the top or allocating monthly savings. The latter, very nontechnical term, means setting aside project funds prior to budgeting for anything else. This could result in other areas of an operation not seeing the funds a business wishes they could, but at least the project was paid for. These businesses could have also set aside funds each month. For your own purposes, if you chose to save up for a project, remember those set-aside funds should remain untouched.
To Be Efficient, Be, Be Efficient
Efficiency breeds success and there is no better way to be efficient than to set priorities, to project and to save via an annual budget. Additionally, if your company is of the start-up, low-funded variety, you will need to show a lender your annual budget as part of a business plan. So if you haven't budgeted yet, get to it. Include how much money is needed to fund operations and projects, as well as cash flow projections, and other variables.
Whether you are just starting or your budget battle is complete, just remember all the exciting digital awesomeness that is right around the corner.
