Why you need Business Budgets and Plans
By: Corporate Training Options, Australia
Business Budgets that are regularly monitored and updated are key to business success. Checking and adjusting your budgets allows you to allocate resources when they are needed, so your business continues to grow and remains profitable.
Successful business budgets work best when you tie them in to your Strategic Plan. And your Strategic Plan needs to be developed in conjunction with your Operating Plan, which includes your business budgets and forecasts. When you build all these documents together – your strategic plan, operating plan and business budgets – this can help you achieve and sustain business growth and profitability.
Why Bother Planning?
Some of the key benefits of business planning are that it allows you to focus on the direction of your business, and provides you with targets to monitor your business success. As your business grows and changes, you need to know how you’ll move forward. This allows you to be more flexible and dynamic when planning and budgeting for the future.
A Strategic Plan determines the vision for your organisation’s future, and identifies your long term goals and objectives. It establishes agreement around intended outcomes and results. Your Strategic Plan looks further ahead than your Operating Plan, and helps you make sense of a constantly changing business environment. It also helps you forecast where you’re going, so you can budget accordingly.
Your Operating Plan sets out the strategy and action plan for your business over the coming twelve months. It can outline the changes you plan to make in your business, set your goals, objectives and key performance indicators, and includes your financial performance and forecasts.
To learn more about the training available on this topic from CTO, visit the course page – Strategic Planning, Budgeting & Forecasting.
Plan your work for today and every day. Then work your plan.
How to Build a Strategic Plan
A Strategic Plan helps you forecast the future of your business in a world where change is ongoing. The key to dealing with constant change is careful strategy development, around your business budgets and forecasts.
When working on business budgets, you also need to work with your organisation’s leaders on the business Strategic Plan. Your Strategic Plan can be developed via the following steps:
- Determine your organisation’s Vision for the future
- Write or update your Vision and Mission Statements
- Analyse the external environment
- Review your internal capabilities
- Set annual goals for your organisation and devise actions to achieve these goals
- Allocate resources and set budgets to execute the actions
- Put it all together
Business Budgets in your Annual Operating Plan
Operating Plans involve utilising the resources at hand to the best of your ability. When putting together a Business Operating Plan, you need to begin by considering the goals you want to achieve for your organisation this year. Next, break that down into quarters so you can identify which key priorities will be your focus.
Review your Sales History, and forecast your sales growth for the next twelve months. Next, budget for your projected Sales, and your Costs of Sales. Also then include your labour expenses, depreciation of plant and equipment and other business expenses.
As your year progresses and you move from one quarter to the next, monitor your budget for any changes that will require you to alter your operating plan. Sometimes priorities will change, which may necessitate a different course of action. This will help you focus on critical tasks rather than those that aren’t as important.
Preliminary Steps to Create your Annual Operating Plan:
- Draft your Annual Goals
- Review your Organisational Plan
- Examine you Sales History and Create your Sales Projections
- Create a Fiscal Calendar
- Budget for Sales and Costs of Sales
- Include Labour expenses in your budget
- Budget Depreciation and other Expenses
- Work on your Balance Sheets and Cash Flow Plans
When preparing business budgets for a new financial year, often the approach is to simply add five to ten percent to the previous year’s budget. This is a starting point; however, you should also determine what resources will be necessary to achieve each projected budgeting goal. These resources can include things such as personnel and various types of available funding.
Reviewing and Executing Business Budgets
The purpose of a business budget is mainly to plan, track and control spending. As the year progresses, it’s important to ensure your budget is on track by conducting regular budget reviews. Monitoring your expenditure is essential, not only to track expenditure against your targets, but also to identify any changes in circumstances which may need corrective action.
It’s also important to ensure that business income is achieving projected targets, to ensure your budget remains balanced, and in sync with your forecast business growth.
When planning and executing business budgets, you should also account for inevitable changes in resources which were part of your initial forecasts. As the business environment continues to shift, you’ll need to modify your overall plan, including evaluating its effectiveness. As your resources are altered, update the forecast, and advise those around you, so they will be aware of what is to come.
Adjusting your Plans and Business Budgets
In the business world, small differences between actual and budget figures are normal and to be expected. It’s therefore important that you learn how to create and manage an adjusted plan. You may also need to create new forecasts if you have significant variance in your budgets. This is where adjusting your plans and business forecasts allows you to use your plans to improve business control.
Business budgeting and planning is key to business success. Creating, monitoring and adjusting a budget allows you to allocate resources when they are needed, so your business continues to grow and remains profitable and successful.
By investing the time to create and manage budgets, and by basing your budget on your business operating and strategic plans, you will be creating a financial action plan that can make all the difference to the growth of your organisation. It will enable you to concentrate resources on improving profits, reducing costs and increasing returns on investment. The most important things are that your business plans and your business budgets are dynamic, and are communicated to everyone involved in your business prosperity.
Strategic plans and Operating plans are both part of the business budgeting process.
Strategic planning allows you to develop a vision for your company – where you want it to go and how you plan to get there. Operating Plans provide your business roadmap for the next fiscal year.
Business budgets are an essential part of executing these plans and ensuring the steps to get there are financially realistic and cost effective.
It’s important that the two processes are kept in alignment and developed at the same time. Your strategic planning and business budgets should influence each other, keeping you informed about your business progress, and keeping you on track to succeed.
Learn more about the course
Corporate Training Options presents a Strategic Planning, Budgeting & Forecasting course, which will provide you with the skills to create a Strategic Plan and an Operating Plan for your business, and Business Budgets for sales, labour and expenses.
You will also learn to interpret a Balance Sheet, review Financial Plans and prepare Business Forecasts.
The Benefits and Learning Outcomes you will achieve from the Strategic Planning, Budgeting& Forecasting course, include you being able to:
- Understand the principles of strategic planning
- Build a strategic plan starting with a mission statement
- Create an annual operating plan
- Budget sales and cost of sales
- Include labour expense
- Budget depreciation and other expenses
- Create and interpret a balance sheet
- Review financial and presentation aspects of budget plans
- Create an adjusted plan and forecasts
For more information or to book your training, you can contact Corporate Training Options by emailing us at email@example.com.
About Corporate Training Options
Corporate Training Options (CTO) is a Business Training Company, which provides you with training in essential business skills, via onsite and online professional development courses.
The courses provide a cost-effective way of ensuring you and your team are presenting your best image to the world.
CTO onsite courses are customised to meet your requirements and will assist you to develop strong skills in:
- Customer Service
- Leadership & Management
- Strategic Business Planning
- Project Management
- Marketing & Sales
- Business Administration
- Finance & Accounting
- People & Culture
- Computer Software Training
- Personal Development
For more information on the range of Business Training Courses available, please visit the CTO website – cto.com.au
We look forward to working with you, to build your confidence, improve your efficiency and maximise your potential.
Corporate Training Options
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