In turn, you will be less likely to reinvent the wheel each year. So why is planning so stressful? It outlines the direction business plan financial forecast your overall business and each function of the business supporting that overall direction. Your business plan should be communicated throughout your organization.
However, you should take a broad view of the business plan and share it. A forecast is financial trend that mirrors the business plan period. Value of the dollar over each year. You should try to transition low margin business for new higher margin accounts. You should have a baseline conservative projection in line with your business plan strategy, and then a second line that accounts for risk and opportunity. NEED, and which ones may be necessary. It is easier to get funding for non-budgeted investments if they are based on exceptional growth.
By having a realistic story and a separate story for risk and opportunity, you can create a real document that your company can use. Are facility expansions or capital equipment expenditures required? What inventory levels will be necessary for the plan, are they different than previous years? Is more space required, less space? Be realistic in your assumptions, not too conservative on costs. Your objective is to reduce overall costs and improve efficiencies. Be sure to incorporate any marketing plans into your cost structure.
Will there be new packaging, new services, etc. A budget is a micro level analysis of the upcoming year. Do you plan any price increases or cuts? Your timing should line up with profit adjustments.
Do you have purchasing contracts in place? Try to settle these prior to finalizing your budget. The more accurate the data, the better. Can you negotiate sales contracts with key accounts prior to the budget process in order to reduce price and volume risk? All departments of the organization incorporate their spending assumptions in the budget process.
Use current year actuals as a base, then justify increases or decreases each month, taking into account any explanation for dips and peaks that occurred in the current year. Make sure your budget is also a rolling document. What changed, and do these changes impact future months? DO use old information to plan for the future. DO tell as story with your data.
Think about your own planning experiences. Does your company do a good job? Do you have a question for Lisa? Did you find this story informative? We would like the opportunity to keep you up to date on all of our training articles. Please register for our newsletter so we can do just that.