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A pair of female hands, one typing on a calculator and one writing on a page with a pen, to illustrate the building of a lab budget.

Three Keys to Building Better Lab Budgets

To budget effectively, lab managers need to have a clear understanding of what is most important for the lab, and what compromises can be made

Scott D. Hanton, PhD

Scott Hanton is the editorial director of Lab Manager. He spent 30 years as a research chemist, lab manager, and business leader at Air Products and Intertek. He earned...

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Building budgets for the lab for the next fiscal year can be a daunting and frustrating process for most lab managers. Fundamentally, building the budget requires compromise and prioritization. To build better budgets, we need to have a clear understanding of what is most important for the lab, and what compromises and trade-offs are required to create the cash flow expected of the lab. Improving cash flow requires earning more revenue and/or reducing costs. Finding the right level of spending for the lab requires communication up and down the chain of command to really understand the cash flow expectations of line management, and understand the technical needs of the scientists on staff. Building an effective budget is achieving the right compromise between those different needs. Here are three tips that will help you and your staff develop a prioritization system that will improve delivery and morale in your lab.

#1 – Know your numbers

To build any budget, you have to understand your spending and your cost stack. You need to know the details of where the money goes, and have a good idea of the benefits of each type of spending. Too many lab managers leave this important activity to the financial people, and don’t have the knowledge to participate in detailed negotiations around budgets. 

#2 – Know what is important

Ensure the budget reflects the culture of the lab. Invest in the things you say are important. If your lab culture highlights innovation, then having state-of-the-art instrumentation is important. On the other hand, if productivity is the hallmark of the lab, then labor-saving devices like software and automation may be key investments. In every lab, the people are the biggest cost. Make sure there are items in the budget, like training and development, to ensure the investment in the people pays off.

#3 – Be willing to negotiate

It is important that lab managers take the time and spend the energy to negotiate with senior managers around the details of the budget. Make sure you learn what they think is important and seek a win/win outcome for the budget. Emphasize items that are important to the lab and the staff, but be willing to compromise on items of lower importance to you. Most budgets don’t have room for everything. The needs will have to be prioritized over the wants.

Thanks for reading. I hope you can use this information. I am very interested in hearing from you. If you have feedback or comments on this set of tips, or suggestions for future Manager Minutes, I’d love to hear from you. Please reach out to me at I’m looking forward to our conversations. Thanks.