When scaling a business, it’s inevitable to have unexpected expenditures and monitory challenges. How can entrepreneurs ensure finances don’t come in the way of their company growth?
Every business and project is subject to financial constraints but some budgets are certainly more restrictive than others. It’s often the case that the budget for a project is stretched by increasing scope, unexpected costs, clients moving the goal posts – often repeatedly and deadlines that prove difficult to meet.
When you see that your budget is ominously closing in, try not to worry. Planning for this eventuality and building a level of flexibility in your plans can help you grow your business and deliver successful projects on time.
So what steps can you take to plan for budget restrictions? Here are a few tips.
Identify the wiggle room
A budget is certainly not the only constraint businesses and projects are subject to. Time and resources are also part of the so-called Iron Triangle. These three factors restrict the choices you can make. However, the key is that not all is necessarily set in stone.
For example, you might be right up against it on budget but there could be some wiggle room in terms of the scope of the project or delivery time that gives you some much-needed flexibility. Identifying where the wiggle room lies can help you achieve success and keep you from compromising on product quality.
Be transparent and provide options
If it’s going to prove impossible to deliver a project while sticking to the budget, it’s time to start discussing your options. Very few stakeholders get everything they want but that doesn’t mean a satisfactory outcome is far-fetched. The key question to ask is what you can deliver within the budget you have? Collective discussions about the key functionality or attributes you must keep can help to focus the mind on the critical success factors.
Provide creative solutions
The ability to provide creative solutions in a crisis is one attribute that makes excellent project managers and business owners really stand out. Sourcing cheaper labour by getting help from volunteers, raising additional funds through crowdfunding, bootstrapping and even renting rather than buying technology are all ways to stretch budgets in tough situations
Beg, borrow but don’t steal
We’re not advocating stealing to meet budgetary constraints but the most effective chieftains will often tap into their informal networks and barter their way to the resources they need. For instance, if your project requires the assistance of a database expert but you don’t have the budget to pay for one, could you borrow one from another department and offer your team’s expertise in exchange? Outside official channels is where much of the cost-cutting is done and this is when your network connections can be beneficial hence creating a win-win situation.
More money is rarely the answer
Cashflow is the lifeline of growing a business but it’s essential head honchos understand the importance of working with what they have. The human condition is to think more money will make things better but in truth, it rarely does. The same can be said for your budget. More funding often leads to more waste. So think lean, seek to eliminate waste and focus on activities that deliver the most value to your stakeholders. By maximising efficiency you won’t go wrong.
There are a lot of challenges associated with restrictive budgets. But by being prepared to improvise, adapt and overcome, the best business owners and project managers can still experience success even with limited cash.