How to prepare your L&D budget

Preparing your L&D budget is no small undertaking. However, if you perform your due diligence and truly take a strategic approach to the budget, then you are far more likely to get approval.
John Sherman

Preparing your L&D budget is no small undertaking. Sometimes it can seem like you are going out and fighting a battle every time you attempt to justify it to the higher brass! However, if you perform your due diligence and truly take a strategic approach to the budget, then you are far more likely to get approval for it.


Here are a few ideas that will help you make the process more effective:

Put together a rock-solid strategy

Before you prepare your budget, you will need to identify exactly what the macro and micro objectives are within your learning strategy. You should put together a document that identifies key deliverables, short and long-term objectives, and most of all, the return on investment. You should be able to clearly articulate how this program will pay for itself over and over again.

Take a look at the data

Research is a huge part of the process when you create your budget. First you'll want to have a look at what's going on in the industry and where other organizations are allocating funds. The truth is you don’t have to look far—you can do a tremendous amount of research these days with a simple Google query.

You also want to look at what your own internal numbers look like. Where have you needed funds the most in the past? Where did you fall short of your target before due to financing obstacles?

For each one of your line items, you should ask yourself how much of a direct impact it will have on the bottom line. If you are acutely aware of profits and the processes that drive them within your Learning Department then you'll know which items to “zero-in” on.

When you create your research documents, make sure that you highlight the industry standards so that you can compare where your organization is right now versus where it should be in the near future to maintain a competitive edge.

Be prepared to argue your case

The "powers on high” that have the authority to approve or deny your requests will want to know exactly how you came up with each item within your budget. This means you will likely need to justify your requests and provide the data that backs up your findings. If you can't explain why a budget item is the number that it is, then you will be fighting an uphill battle that you will likely lose. Again, it's a good idea to focus on explaining the return on investment so that stakeholders feel confident in handing you the money.

Optimize for results

Your budget should be oriented towards measurable results and there are a few metrics that you can use to measure your success. Cost-per-learning-hour is one of the easiest to start out with. Following that, you should look towards outcome-based metrics, like improving employee satisfaction scores, reduction in compliance issues, sales growth, and so on. If you stay focused on the numbers that provide a way to measure your success, then you will be able to better understand and justify the financial resources required to obtain them.

Identify opportunities

Before you complete your budget you should spend some time evaluating opportunities that may have been overlooked in the past. What changes are happening in the industry right now that could affect your people? What new developments are taking place to improve eLearning deliverability, for example? Are there new tools and resources that can cut down on costs?

This is a fantastic opportunity to sit down with leadership and your key team members and brainstorm about the opportunities that could be out there. This may change the budget, but it could be the very thing that convinces stakeholders that you are on the right path. Innovation is one way that companies maintain their competitive edge and if you can discover innovative ways to deliver your learning material, for example, then you might have a much more attractive budget in the end.

Prepare a document that discusses worst-case scenarios and alternatives

This goes back to the justifying process that you may need to do. It's a fantastic way to present your argument because you will be illustrating what could happen if funding is not acquired. How might a compliance issue affect the company as a whole? What would the legal costs be?

Always be prepared to talk about the lost opportunities in the financial obstacles that could come about if your Learning budget isn’t met. Some of the results may not be disastrous but they could certainly be cases of lost revenue. If you can articulate these clearly then you will be able to attack any objection head-on and you’ll be much more likely to get the funding you need.

Some might argue that preparing your L&D budget is one of the most important parts of the eLearning process. After all, nothing happens without acquiring the funding to do it, right?

This is a part of the job that requires meticulous research and evaluation, while at the same time understanding how to sell your ideas to stakeholders. So don't forget the “human” aspect of the process. While you might be dealing with numbers, the real test will come when it's time to hold your hand out and ask for the money!

For more insights, subscribe to the Go1 newsletter to stay on top of all the latest L&D trends. Or, you can book a demo today to find out how Go1 can help with your team’s learning needs.


Go1 helps millions of people in thousands of organizations engage in learning that is relevant, effective and inspiring.
Latest stories and insights