How do we know when we will run out of money? That’s what budgets are for. What is this budgeting process all about? How do you teach someone how to budget? How do we create comprehensive budgets for something in the future?

Strip all the accounting jargon away, and you find that a budget is, simply, the money part of every business plan. The first step in planning is visualization, seeing into the future and imagining the resources required. Working with my students, I insist that their visualizations include colorful detail, the smell of the room, the focus of light, the heat of the moment. When the vision of a project can be described in vivid, compelling terms, the job of imagining the budget becomes so much easier. How do I teach people to budget? I teach them to visualize the future and imagine the resources required to create the picture. You can do this individually or with your team.

The second step of any business plan is taking inventory (not literal inventory), but reviewing the historical elements that got you to the present. Prior projects often have “budgeted” costs and always have “actual” costs. Reviewing these historical reports combined with that clear picture of the future will create a budget with fewer surprises. -TF