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The seven-step process to better budgets and forecasts.

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Starting in July 2023, we intend to share a brief insight from our consulting work each week. Bite-sized tips that you can use Monday morning. This is the first in that series.

As we commence a new financial year, we must traverse the process of forecasting our organisation’s financial budgets.

This is often a best guess exercise, done in Excel with income and expense lines changes based on the manager’s or the board’s expectations.
These are usually wrong…

Following are seven steps worth considering when budgeting 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 and report lead indicators, Efforts & Results, and actual performance against budgets on a weekly, monthly, and quarterly basis.

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