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How to budget for your company so you can grow forever

Step 3

Continue the process until the budget is allocated for the time period, and then go about your business.

The problem with draw-down budgeting

When a budget starts with a big number, people will feel more free to make large budget requests even if they are not the best for the business. Unfortunately, this type of budgeting creates the mentality where people ask for big things up front in case they won’t be able to ask for them later.

To avoid this pitfall, shorten the time frames for the budget – to quarterly or monthly, not annually.

The second issue with draw-down budgeting is that it can become very political. Even with a robust prioritization framework, politicking at work could change who actually gets big dollars in the end.

Avoid this pitfall by making your prioritization framework incredibly clear and transparent so no one can politic around it.

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