The 7 immutable Laws of Corporate Budgeting

I’ve being dealing with Budgets in Corporations ever since I started working, in the middle of the 80’s (yeah, a long time ago).  Through these years I have collected the following immutable laws about doing this useless, time-consuming piece of inefficiency:

1. The pocket matters Rule : 
      The higher the amount of variable income that depends on reaching BUDGET  targets, the more modest the BUDGET will be
2. The micro Rule: 
     The more specific you go in your BUDGET  (micro-managing), the higher the risk of a huge failure
3. The Board Rule (and the board rules) :
     The Board always thinks that the BUDGET is too shy, it does not matter who belongs to the Board and even less, how much the BUDGET is higher than the previous year.
  
4. The fallacy Rule : 
     A BUDGET can never ever be presented without a significant growth in comparison to the previous year, however, if the previous year was a really extraordinary one, it suddenly becomes not a criterion for the BUDGET.

5. The must-grow Rule: 

     If you are not growing in comparison to previous year, you have not yet finished the BUDGET.

6. The nullity Rule:
     When you finally finish the BUDGET, it is time to do the FORECAST
7. The black swan around the corner Rule: 
     The BUDGET is never wrong, We just do not know why the actuals, unexpectedly, behave differently.
That is it.
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4 thoughts on “The 7 immutable Laws of Corporate Budgeting”

  1. I strongly believe that the company you used to work lost an enormous and great professional, however, i’m glad you have pursued a better professional life.

    Thank you for sharing your wide knowledge and culture.

  2. The white elephant in the middle room Rule :

    The larger the bureaucracy of the process of releasing the budget, the higher the probability of the supply area cant help you to execute it! Establish the best vertical and horizontal communication, with all the involved areas, and do what you have to do! Find the fastest, preferably the cheapest supplier, and do it!

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