As we commence a new financial year, we have to traverse the process of forecasting our organisation’s financial budgets.
This is often a best guess exercise, done in Excel with changes in income and expense lines based on the manager’s or the board’s expectations.
These are usually wrong…
Following are seven steps worth considering when forecasting your financials for the coming year…
1. Current Year Actuals (actual performance) used as the baseline for Budget
2. Changes in the Environment that will affect the Budget and your response to the Environment and its effect on the Budget
3. Other changes to the operations (cost reductions, revenue growth) and their impacts on the Budget
4. Opportunities & New Initiatives. Growth plan – include costs and related revenues/earnings (if over multiple years – note).
5. Generate a Baseline Bullet-Proof Plan B and an Aspirational Plan A.
6. Identify the Key Efforts and Results needed to achieve the Budget Plan?
7. Monitor lead indicators, Efforts & Results, and actual performance against budgets on a weekly, monthly and quarterly basis.
The MarvinHR De-Brief – Episode 2
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