Sales teams worldwide are often met with the dreaded – I’m sorry we just don’t have budget! Well let me give you some simple logic why budgets are totally irrelevant to spending decisions.

3 Examples

  1. Just because a line item has been created in the budget doesn’t mean it’s authorized. Let’s say you have budgeted a trade show cost at $20,000. Does that mean that no matter what happens in the real world your sales team will absolutely go to that trade show. I don’t think so.
    Why not? Because the marketing team have identified a far higher Return on Investment by spending that $20,000 on Google Ad-words for example. The fact it was in the budget – irrelevant.
  2. As a sales professional you’ve identified a prospect whose life could be improved by your software/service/hardware solution. The consequences of the prospect taking no action are severe. There is no budget. The key to the next stage of this dialogue – the prospect and the sales professional articulating a compelling Return on Investment (ROI). Management are not paid to spend the budget. They are paid to maximize the efficiency of capital deployed.
  3. You are the chairman of a small public company involved in HR Outsourcing. You have built a team with deep commercial experience including acquisitions. You have no budget for acquiring companies. An investment banker approaches you with a small private HR outsourcing company that dominates the Philadelphia market. This is a city where your coverage is weak you but that’s contiguous to your other operations in New York and New Jersey. This deal could really transform your operation. As chairman do you ignore this opportunity because there is no budget? I suggest that would not make sense. Depending on the deal structure and the execution of the post acquisition strategy, there is a very attractive ROI worth pursuing.

Don’t let a lack of budget get in the way of insightful business decisions. Budgets are valuable tools to mimic potential policies but they should not be allowed to constrain management from optimizing the deployment of capital