Unless you are truly a pillar of financial discipline, you’ve probably had to deal with personal budgeting failures at some point or another in your adult life. Forgetting to factor in an infrequent expense, like car insurance, splurging on a really nice meal “just because,” or ending up with an emergency car repair—all these things tend to wreak havoc with our budgets unless we’ve got our rainy day funds in order.

While business budgets look a bit different from personal ones, they are, unfortunately, just as prone to failure if we don’t follow some basic, but vital, budgeting rules of thumb. Here’s a list of the top 5 reasons business budgets fail.

1. Budgeting is done just once a year.

The traditional model of spending weeks on creating an annual budget simply doesn’t work. In today’s fast-paced business world, annual budgets can be out of date a month after they’re created. That’s why you need a budgeting system that can be updated or changed as often as you need—one that focuses on rolling forecasts, like True Sky, rather than numbers you came up with eight months ago.

2. The process drains resources.

Budgeting is often one of the least-enjoyable tasks for business executives, simply because it’s usually a clunky process that takes a long time, requires extensive number-crunching, and has to be totally redone should a projection change. However, it doesn’t have to be this way. If you work with a budgeting program that streamlines the process for you, you can redirect that saved time and mental energy toward analytics and strategy, rather than just data capture.

3. Your budgeting process is too complex.

Lots of budgeting software requires specialized knowledge to use it effectively, and maintaining this knowledge can be a task in itself. This also means there are usually only one or two people who really know how to use the software—and this can foster a bureaucratic system in which other employees have to route all their requests or changes through those few people. It’s hardly an efficient way to do business. True Sky uses a true Excel interface, therefore, increasing user adoption rates.

4. Companies place all the emphasis on planning and forget about observing.

Businesses need budgets pretty much right off the bat if they’re going to be successful. However, it’s just as important to incorporate observations from historical budgets and as you go through the current year, so that your budget is realistic. If that means that a new product you thought would take $45,000 to develop actually requires $50,000, make note of that and learn from it—don’t treat it as a simple overspending failure. True Sky can be especially helpful for developing insightful observations, as you can easily look at numbers from older budgets, see what changes if you switch out variables, and more.

5. Your budgeting system is siloed.

Breaking down silos is a big issue in business today, with companies looking for more collaboration and open communication between different departments. While it’s certainly true that you don’t want too many cooks in the kitchen (or too many hands on your budget!) you also don’t want to have to handle every single budget-related request yourself. When you use a software system that is simple and accessible, other people who need to see the budget can access it easily on their own. This is why we used Excel to build True Sky—most people know how to use its basic functions, at least.

In addition, this sort of system fosters a greater sense of accountability among employees. If the software is set up with a transparent workflow, it’s easy to see who’s been working on it and what they changed.

Budgeting failures are challenges at best, and disasters at worst. That’s why it’s so important that your budgeting process is as simple, effective, and useful as possible, allowing for review, forecasting, and reporting to take place throughout the year—not just at the start of the first quarter.

For more on how to make your budget work for your business, download our free e-book, Budgeting Best Practices. And if you’re ready to talk about how True Sky can simplify your budgeting process, contact us today!