Is a lack of money holding your business back?

No money in pocket

Today is “International Museum Day,” and I suspect the folk down at South Kensington, the home of several museums in London, will be celebrating. Of the world’s top five most visited museums, three are in London, with the Natural History Museum at the top. But I have an idea that the people responsible for the success of museums in the UK will be a little concerned about the noises coming out of Westminster this week. Speeches by the Prime Minister and the Leader of the Opposition fired the starting gun for what is likely to be a long election campaign here in the UK.

The issue for both these political leaders is the huge demand on the public purse with little real way of raising extra cash. For the museums funded by government grants, things could get a little tight. The staff at the museums might need to be creative if they are to remain at the top of the world when budgets are tight.

Meanwhile, money is likely to be a problem for troubled aircraft manufacturer Boeing. Aircraft orders have plummeted this year following several safety issues at Boeing. In the past month, only seven aircraft were ordered, compared with a significantly larger and growing order book at Airbus. What’s the betting that teams within Boeing will be complaining about lack of money and the need for higher budgets?

I suspect you hear a similar plea in your office, too. I know I do. I hear people complaining that they cannot achieve things because “we don’t have the budget”. Indeed, the latest study of Chief Marketing Officers shows that marketing budgets have fallen to historic low levels. Marketing is now just over 10% of company spending, whereas it has been as high as 25% in the past. Marketing people are probably busy saying they cannot achieve what’s required because they need more money to be effective.

However, more money doesn’t necessarily mean it will fix things. It was revealed this week that despite record funding being provided for the National Health Service, productivity has dropped 10%. The fact is, the more money that’s pumped into the healthcare system, the worse it becomes. Part of this paradox is explained by the possibility that workers put in less effort because they feel they don’t need to work so hard, believing that the extra funding is the solution. 

Over 20 years ago, Harvard Business School suggested that the whole notion of budgeting in businesses should be scrapped. Forbes magazine contributed to the discussion a few years later, saying that budgeting and relying on how much funding there was created a fixed mindset, limiting people’s ability to work effectively.

So, let’s imagine you have been given £1,000 to do some marketing. You probably allocate some of it to content creation, some to social media and online activity and the rest of it to posters. Then you say your job is done because you cannot afford anything else. Result? The sales team say you should have done more marketing. 

What if you had no budget, though? Your creative juices would start flowing, and you would produce all kinds of ideas all the time. You wouldn’t give up. And, because you had no funding, you would constantly be looking for ways of doing things which were freely available. Result? More marketing activity that keeps the sales team happy.

Recent research from Constant Contact, the email marketing firm, shows that the most crucial factor in improving marketing is not funding but time. More companies in the survey said they would allocate more time to marketing rather than providing more money. In other words, there is the realisation that it is not money that is the most important resource, but time. 

It appears that when we have a financial budget we spend less time on the activity it is supposed to be funding. That reduces our creativity, and it means we have a lower output. Lack of money is not holding your business back at all, it would seem. Budgeting and funding could be a restriction on your productivity. This is why the museums do not need to worry about the impending election, nor do the folks at Boeing need to be concerned about falling sales impacting their funds. Indeed, any potential lack of money could be the best thing that happens to them.

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