Budgets. Seems like it should be a four-letter word right? This one word causes so much angst over the course of a year and it is a necessary evil to execute our projects. Why is it that everything in the business world is continuous except budgets?
Let’s look at a few ways to spend the budget you get and maybe even spend more that you were granted.
Think back to the end of last year, you enjoyed some wonderful time off, return to work in January refreshed with the prospect of starting an exciting new packaging project only to find that budgets have not been approved in the company yet. So you’re on hold for a bit, but then January turns into February, February to March…
Or have you ever had all or a portion of your budget swept soon after the second quarter results are reported so the company could try to meet 3rd quarter or year-end numbers for investors? This is where private companies have an advantage; they can focus on what is right for the company in the long term versus managing short terms results quarter by quarter.
So, your budget may not be ready to spend in January and it may be swept later in the year. This may not leave much time to spend. I have heard from packaging associates that sometimes they lose four to six months out of a single year due to the inability to spend for one reason or another.
How can we avoid some of these problems that slow our personal progress, company’s progress and increase our company’s time to market? Here are six different approaches you can try to get, keep and even increase your packaging budget:
1. Get pre-approvals at end of year.
Most companies start working on business plans in the spring of the preceding year. By the fall, budgets are coming together. So what can you do to be ready when you go back to work that first day in January? The answer is to get spending pre-approved in December. Often you can get approvals so you are ready to cut purchase orders and spend that first week in January. Check with your finance department about how to do this.
2. Spend what you have quickly.
Just like your training and development budget that starts to disappear if not spent early in the year, spend your packaging budget quickly. Get suppliers approved, receive quotes and submit purchase orders. The early bird gets the worm and so it goes with budgets. It is common to underspend early in the year. If you spend your money and need additional budget later in the year for something important, it will likely be found. Spend the money when you have it because you never know when it will disappear.
3. Spend in phases.
For big ticket projects it may be difficult to get all of the funding approved upfront. Using a stage-gate approach makes great sense from a project management perspective, but it is also a great way to secure funding for a project. Request the budget needed to complete the next phase of work only. Be prepared to share, in detail, how the monies will be spent and over what timeframe.
When you need more budget, go in with the positive results generated from the last phase and the new spending plan for the next phase. If the last phase was well executed, but the results suggest the project should not continue, you don’t need budget anyway. Or you may need just a small amount of budget to go back and recycle to generate some missing information or data.
4. Come up with a great new idea(s).
Let’s admit it. All of our ideas are not winners. So what do you think will happen if part way through the year you come up with a killer idea? Is the company going to tell you that you have to wait to go through the next budgeting cycle? I doubt it. If you come up with an incredible new opportunity, articulate what you need and the benefits to the company, most organizations will find the money you need.
5. Spend other function’s budgets.
Think about another function—innovation, brand and consumer research, for example. I can hear everyone reading this saying to themselves “Oh right. If I can’t get the budget I need and money is so hard to get, why would someone else give me their budget?” Sounds crazy right? It is, but it is also true.
Often certain groups in the company get more budget than they have a plan for. Can your project help them meet their objectives? Maybe you can create a win-win. Get out and network internally to find out how much budget your coworkers have and what the funds can be spent on. I was frequently successful finding budget with another group where my project helped them achieve their goal.
6. Be ready to spend at the end of the year.
Just like being ready to spend when the new year arrives, you have to be ready to spend when everyone else is planning their December holiday vacation. Many of your colleagues do not spend all of their allocated budget and, in most organizations, it does not roll over to the following calendar year. It is “use it or lose it” time.
Also, for some strange reason, many companies award next year’s budget based on what you spent this last year. Thus no one wants to underspend. It has never made sense to me that companies rush to spend money in December (on things that funds really should not be spent on) only so they can protect their budget in the upcoming year. Is that really in the best financial interest of the company?
Anyway, always be ready in November and December to spend. Have vendors approved. Obtain quotes. Have purchase orders drafted. Often, this is a first come, first served exercise, so being prepared only increases your chances of getting the unspent budget.
Scott Biondich is the president of Packaging Innovation & Design LLC, a consulting firm that helps companies create incredible branded consumer experiences through new package and product development. Previously he was a group director at The Coca-Cola Co. responsible for packaging and equipment development for North America. He led numerous projects to commercialization at Coke, including Share A Coke packages and shaped aluminum bottles. He serves on the Editorial Advisory Board for Packaging Digest and The Canmaker. Reach him at email@example.com.