Goal-Based Budgeting

Setting goals sets us up for purpose-driven growth. Any organization should want to grow whether it's subscribers, customers, or donors.

John Maxwell, in the 15 Invaluable Laws of Growth, states "If you want to keep giving, you have to keep growing". Lou Holtz said "In this world you're either growing or you're dying so get in motion and grow." For me, I want to get busy living and giving. The only way to do that is on-purpose. Here's how we can take a goal and build a real budget from it.

To be fair, we are keeping this simple at this point to a sales and marketing budget. You would need to look at what capacity you have to meet these additional sales. With that in mind, let's use an example of ABC Construction that wants to increase sales by $1 million this year.

First, we need an average project sale amount. Let's assume each customer or project averages $100,000 in sales. Then, to increase sales by $1 million, we need 10 projects. We can't just produce the 10 projects out of thin air, so what do we need to budget for marketing to obtain the 10 projects? A quick web search results in a rough estimate of around 10% for marketing for these jobs. Ten percent of one million is $100,000! Wow, that may sound like a lot, but it means we need to spend money to make money. Monthly, this is $8,333 for a sales and marketing budget. That may include a sales manager salary, ad spend, or some combination of both. Do not neglect that you need a marketing budget now (future blog).

See what we have done so far? We have the beginning of a budget based on our goal of $1 million in additional sales. We now have a base sales budget and a marketing budget. There is much more to a complete budget to cover later, like materials and labor, but this gives us the "measurable" part of our goal process.