When I started my company, Zillion Technologies Limited, several years ago, it was a humble beginning with just two employees - Grace and me. Like any budding business, we aspired to be professional and adhere to the formalities and standards of established companies. One such formality was the creation of an annual budget. However, we quickly realized that this conventional approach didn't quite fit our unique circumstances.

Our financial situation was far from stable during those early days. Fluctuations were the norm, and trying to predict our income and expenditure for an entire year became an exercise in futility. This is a common struggle for new companies lacking historical data to gauge transaction trends or client acquisition rates. In our case, monthly budgets seemed to be a more pragmatic approach based on the assumption that they could adapt to our ever-changing financial landscape.

Yet, even monthly budgets couldn't save us from the rollercoaster ride of income and expenses. Each month brought its own set of challenges, making it nearly impossible to predict our financial position accurately. Let me share a few examples to illustrate the unpredictable nature of our early months in business:

1. Month One: Our office, equipped with only two PCs, suffered a blow when one of them had its motherboard malfunction. Replacing the motherboard cost us a substantial sum, denting our budget for the first month.

2. Month Two: To our dismay, the same PC had another motherboard issue. We discovered that the problem was related to welding activities near our office location. To address this, we invested in a stabilizer, further straining our budget.

3. Month Three: The expenses for the stabilizer were made within the third month, adding to our financial challenges.

With each month presenting unexpected costs, we found ourselves carrying over budgeted items to the next month. This trend continued as our company faced unique financial obstacles each month. Traditional budgeting simply couldn't accommodate these fluctuations.

In response to this financial turmoil, we decided to shift our approach. Instead of budgets, we introduced a "priority list." This list contained all the financial needs and issues, sorted by priority. When funds became available, we would address the top priority item, and if finances allowed, move on to the next. Some months, income was nonexistent, and our list remained untouched.

The priority list offered several advantages:

1. Flexibility: Unlike rigid budgets, the priority list adapted to our ever-changing circumstances. It allowed us to allocate funds to the most pressing needs as they arose.

2. Reduced Frustration: The frustration of consistently falling short of budget targets disappeared. We focused on what mattered most, given the available funds.

3. Laser Focus: We had a clear understanding of our financial priorities, ensuring that the most critical expenses were addressed first.

What I liked most about the flexibility of the priority list is that it enabled an item to jump from any position into position number one or vice versa, depending on the prevailing circumstances at the time. Unlike rigid budgets where priorities are often set in stone for the entire year, the priority list allowed us to swiftly adapt to unforeseen financial challenges or opportunities.

This dynamic quality meant that if a sudden urgent expense arose, it could take the top spot on our list, ensuring that we could allocate resources where they were most needed without being constrained by a predefined budget. Similarly, if a priority became less critical, it could gracefully shift down the list, giving us the agility to respond to changing business conditions effectively.

In conclusion:

For micro companies, whose income and expenses fluctuate wildly, the priority list emerges as a practical alternative to traditional budgeting. It provided the adaptability needed to navigate the unpredictable nature of finances. The priority list allowed us to make informed financial decisions based on the funds at hand and the unique challenges of each month. While budgets have their place, micro companies can benefit from the agility and focus that a well-managed priority list offers.

Kind Regards
Julius Czar
Author: Julius Czar
Company: Zillion Technologies Ltd
Mobile: +256705162000 / +256788162000
Email: Julius@RealEstateDatabase.net
Website: www.RealEstateDatabase.net
App: Install the RED Android App
Follow me on: Twitter, LinkedIn, Facebook.