Some companies operate on the calendar year, some on the financial year, others again on different foreign financial calendars, but it seems at any one time, a good portion of the economy is paralysed by budget planning.
I’ve lost count of the number of people who can’t make a decision, or plan something they want to do, because they’re waiting for the annual budget or other plan to be approved. This process often takes months.
Of course there are certain taxes and legal requirements that require compliance on certain dates and annual reporting, but I think many businesses would benefit from moving away from arbitrary timelines and instead find a planning structure that suits their size and velocity.
While operating on 12-monthly cycles may be necessary for some companies, it’s impossible for any lean and growing company to work this way.
The problems are compounded for a fast-growing company, where you simply may not have enough accurate data to make predictions of what a certain product might be doing in 12 months’ time.
Since starting this business we have operated on 90 day periods. Budgets and goals are set for that time, and then re-shaped and updated every 90 days.
During this time, we’ve grown at an average of about 25% a quarter for the last 12 quarters or so. That adds up to more than doubling each year, so you just can’t plan accurately what your business will be like when it’s twice its current size.
Of course, we have a good idea of where we want the business to go in the future, we have a clear vision for 10 years from now, and even a rough idea for the next 12 months, but we also know things change.
We don’t want to lock in a plan for a year, then focus on following that rigidly at the expense of responding to new opportunities or changed circumstances.
How much is your business being held back by arbitrary timelines?