6 Thoughts For Your Planning/Budgeting Process

Can you believe that it’s almost the end of August?

I’ve hardly noticed the summer slipping past – perhaps I dozed more than I intended because of the heat!

It’ll be Labour Day in 2 weeks.

Then kids will be back in school which, for many business owners and executives, will mean that vacations are over for another year and it’s back to work. If your company has a calendar fiscal year, 2012 will be beginning to take shape.

The results from the first two quarters should be firmed up. Orders already in-house and the sales pipeline will provide an indication of whether you will make, or beat, your top line targets or whether there will be a shortfall. Year to date margins and expenses will give you a feel for what, if anything, has to be done to protect bottom line profit.

And, of course, annual planning and budgeting for 2013 will begin soon – if it hasn’t already started.

So here are some thoughts (I’d hesitate to call them pearls of anything, let alone wisdom) from posts I’ve written at around this time of year in the past.

1. To make as accurate a guess as possible about what the future holds you’re going to have to make assumptions. On what information will you base them? Something you read – or are you going to get out and talk to your customers and suppliers about what is happening in their world and what that will mean for you?  (See Don’t Let The Summer Heat Cause A Winter Chill)

2. When so much of what is going on around you seems out of control, it’s easy to stop focusing on the things that are under your control – i.e. whether or not you actually execute your plan. Badly done or completely neglected by many companies, execution is what turns plans into results. (From 6 Tips for Getting Better Results Next Year)

3. In this age of fast, unrelenting change it makes sense to forecast several different scenarios, build assumptions on thorough, comprehensive research (formal and informal) and think through contingency plans. (See It’s THAT Time of Year Again)

4. A sample of responses to a survey sent to our database showed that many companies who said they would miss their targets also said they had completed a structured planning process before the start of the fiscal year. That raises some questions. (See them at Give Yourself A Chance in 2011)

5. The owner must be the champion of the planning process. If, for example, the accounting department are perceived to be driving the process it will be seen as only a number crunching exercise, to be completed as quickly as possible. (See More Heat Less Chill)

6. Think you’re going to miss those top and bottom line targets I mentioned earlier? Then consider changing or modifying your strategy and business planning process. Why? Because if you use the same tools, in the same way, and expect a different outcome you may be in for a surprise. (See Don’t Fool Yourself……… )

Let me know what you think.

And good luck with your planning/budgeting meetings.

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Tags: budgeting, business, Forecasting, Jim Stewart, owner, Planning, Process, ProfitPATH, strategy

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