5 tips for justifying budget increases

Money is a touchy subject, even in business. And asking for more of it, well that can feel like you may as well be walking a tight rope across Niagara Falls. Sometimes, though, it’s a necessary part of developing your department and can even be a sign of success that you need more in order to continue to grow. But before you request more money for your department, it’s a smart move to sit down and analyze whether or not your department actually needs more money.

As you go through your current budget and needs, you may find that you are unnecessarily spending, purchasing overlapping services or just not making the best use of the services and products already in your budget. It’s important to identify areas this could pertain to before requesting more money or your request could be denied, even if it is a legitimate need. To determine if your department is in need of more money, and to justify asking for it, utilize these five tips.

  1. Create productivity reports
    One of the most useful tools I ever utilized was creating monthly productivity reports listing every single project our department undertook that month. Not only was it eye opening for our department, but it also provided executives with concrete evidence of all the behind-the-scenes work we do. If you are requesting more people for your department or raises for the employees you already have, this is a sure fire way to prove you need more people or prove the worth of the people already doing the work.
  2. Forecast savings or profits
    If you’re gunning for a new piece of equipment or service with a hefty price tag, get out your calculator and do the math. The results, whether good or bad, can be shocking. If you put pencil to paper and find out that the savings or increased profits aren’t as impressive as you would have hoped, it could be that there’s a better option out there for you. However, if you realize it is worth it, the numbers will speak for themselves when it’s time to justify that $10,000 software.
  3. Inventory what you have
    A great place to start when you want more money in the budget is to inventory your assets, including equipment, services and people. This shouldn’t be an exhaustive list but should show how the money you already have is being spent and if you’re making the best use of it. For instance, you may be paying for two or more services that essentially do the same thing. Just by eliminating those, you’ve freed up more money and shown you can spend your budget responsibly.
  4. Measure success
    A successful department is much more likely to receive additional funding than one that is struggling. When your department doesn’t focus on sales numbers or another typical measurement, such as in human resources, part of your job is to help your executives understand your value. For instance, have you increased your company’s retention rate through better recruiting? What dollar amount does that translate into over the course of a year?
  5. Provide evidence
    When you’re pitching a new hire, new product or new service and asking for funds for it, executives may be afraid of something they’re not familiar with. Help them understand how much of an asset it is by researching companies that have used the product or service and providing case study summaries of its proven success. In the case of an employee hire or raise, show a market compensation report to provide justification for the salary you’re requesting. It may seem excessive, but for those who don’t work in your department, it can be difficult to grasp the difference it could make.

If you’re requesting more in your budget this year, how are you justifying your requests? Let us know in the comments section below.

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1 Comment on "5 tips for justifying budget increases"

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Bill Bennett

Budgets are a fact of life. If we didn’t maintain or justify one we would not be good caretakers of those elements our supervisors have entrusted us with. Yes some are cheap, downright stingy, but there is always hope that at least we personally can rise above such challenges with a little coaxing in the right direction. The one takeaway I would leave is, think like your decision makers and answer their questions before they ask.