by Randall CraigFiled in: Blog, Growth, Make It Happen Tipsheet, MarketingTagged as: Sales
Where do you spend your organization’s budget? Should it be on communications, or on training? Should it be on infrastructure, or on people? Inside the organization, or to partners?
While these may all be good questions, there is merit on reframing it – especially when it comes to questions around growth.
“Money Now” spending: These are budget line-items that will drive immediate revenue: a specific ad campaign, a booth at a trade show, a product discount. Money Now means cashflow, positive budget results, and achieved quarterly objectives. The positive results reflect the quality of the day-to-day management.
“Money Later” spending: These are investments that will drive revenue at a later date: A productive leadership retreat. Investing in thought leadership. Investing in R&D and patenting your ideas. Engaging an executive coach for key leaders. Money Later builds sustainable competitive differentiation, deeper organizational capability, and often, lower variable costs.
The challenge, however, is figuring out the balance between these categories. Too much Now mortgages the future for better results today. Too much Later means no cashflow that is needed to fund that future.
The biggest risk, however, is not an incorrect balance, but missing the conversation completely. A second reframe:
“Money Never” spending: These are “investments” that are not investments at all: they are boat-anchor expenditures that contribute nothing to revenue now, or revenue later. They are being made because everyone else is doing it. Or because a “sharp” staffer has manufactured a job for themselves in the past. Or because of bad advice from an agency or consultants. Or because you have “sacred cows” that you continue to fund.
Review your budget. What percentage of it would be Money Now, Money Later, or Money Never? If it is highly biased towards Now or Later, was this your intention? And are you being completely honest about your effort and investment in the Money Never category?
Bonus idea: Management performance objectives are often set on short-term measures. In your organization, how might you reward on Money Later goals? And minimize Money Never ones?
Money Never insight: Not all “Money Never” expenditures are bad. Some are designed to reduce risk (insurance, for example), or for compliance reasons (audits, for example).
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