Calvin Needs a Budget

Calvin heard it so many times from so many different people: "what's the budget?" He used a budget for everything from raising money to kicking off a new project. The budget became the sidelines in his games of business.

The larger your company is, the more often you use budgets. But you should wait to create one. Budgets allow you to set clear guardrails on a project or test. Calvin's created countless budgets in his career. But it wasn't long until he learned a valuable lesson about them. Being under-budget isn't always good, and going over-budget isn't always bad. He uses his budget as a limiting factor, not a measure of success. The real measure of success falls under the outcome of the project. If the outcome didn't meet his expectation, he could then decide whether to invest further or not.

Here are a few benefits of becoming comfortable making budgets:

• Feel confident in the amount of investment you're making.
• Answer whether your business is meeting, exceeding, or falling short of your expectations.
• Align everyone you work with to the rules YOU set.
• Measure the cost of decisions in your business.

Below is one outline that Calvin uses to build a budget. Follow these steps to create your own budget:

1. Capture the one-time costs of the project.
2. Calculate the cost of staffing a team to run the project.
3. Calculate any costs associated with property.
4. Capture the recurring costs of the project.

Create your budget then copy the results and save them wherever you'll be able to refer to them best.