What to Do When Your Budget Is Blown Find out how to learn from your mistakes and what your next steps are.
Q: When my budget goes off the rails, should I try to get back on track or start over?
A: Unlike most business questions—to which my response is typically "It depends"—this one has an unequivocal answer: Yes, you need to start over. But that doesn't mean you should trash your original budget and all the work it entailed. Use this predicament to isolate what went wrong and learn from it so you can make a more realistic budget.
Start with a rigorous examination of the current budget against the actual results. Look at each month, as well as year-to-date totals. Take every line item and look at the differences, then examine what caused those differences. Were your projections off, or was performance better or worse than expected? Why? Was it due to regular occurrences or one-time incidents, such as weather, a lawsuit or an accident?