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Most organizations only have a limited amount of financial resources. If you need a bigger budget than the one that is offered to you, you might try to negotiate more money. Use these top tips to put yourself in a stronger position for justifying your budget.
Back up all your Decisions
You need to be able to justify why you have included all the items in your budget. This means explaining what your business objectives are, and how each expenditure item will help you to realize them. Your budget may be better received if you can show that your expenditure is in line with your organization’s overall strategic objectives.
Be prepared to also define the impact that reducing your budget will have. If you have less money at your disposal, you are less likely to be able to achieve as much. For example, if you have to reduce your travel budget, you are unlikely to be able to visit as many clients. If sales growth is a key objective for your department or organization it is important to stress the need to have appropriate budget to help you to achieve this.
Do a Cost-benefit Analysis
For key budget items, if you have not chosen the cheapest options available to you, it is important to explain clearly the thinking behind your decision. A cost-benefit analysis can be a useful way of demonstrating the business sense of your proposal.
Build Trust
It is important to produce a true budget, rather than manipulate the figures to try to get what you want. You might get your budget approved first time, but if you have deliberately overestimated your costs, you may well have your budget reduced next time. If you need £1,000 for a training course, don’t try to increase your estimate to £1,500 in the hope of gaining some spare cash to use for other things. In order to inspire trust in your financial capabilities, honesty is always the best policy.
Be as Accurate as you Can
Make sure that the figures you have already produced are accurate and you haven’t made any arithmetical errors or unreasonable assumptions in your calculations. If you have, and this is detected, it will just raise doubts as to the accuracy and viability of your budget as a whole.
Demonstrate your Budget Management Skills
If your are known for keeping tight control of your budget, regularly monitoring and taking any action on variances, you will be known for your good financial management skills. When it comes to agreeing your next budget, you are more likely to get additional money if your senior colleagues know that you will make good use of your funds.
Be Prepared to Compromise
When negotiating your budget, it is unlikely that all your requests will be met in full by the person approving it. It is a good idea to work out beforehand which aspects of your budget are most important to you, and which you are more willing to compromise on. That way, when you enter into the negotiation, you will feel prepared, less likely to panic, and will have some room for maneuver.
