Budgeting Planning For Success

May 6, 2021 Budgeting and Planning the right way from ProCFO Partners

The most important thing you can do when budgeting and planning is collaborate.

Many CEOs, CFOs and other business leaders will close the office doors, sit alone at a desk and build a budget or plan. This is literally creating a course for the future of the company – yet it’s often done without the benefit of broad and diverse perspectives. Let’s explore how to start budgeting and planning the right way.

Budgeting and Planning With Collaboration

Start your budgeting process by working with your team and exploring the revenue side and the expense side of your business. These discussions help people to share their perspectives, take ownership and understand what’s expected of them.

Collaboration also helps create a culture of honesty in an organization, which is especially crucial for understanding financial metrics and planning against them. Revenues can be great but profitability is low. Redundancies in staff or processes could be creating unnecessary expenses or overhead. Reports will tell a story – the content – but people will help give the stories meaning – the context. Engage in conversations about the financial health of your company.

How to Approach Budgeting and Planning

With collaboration prioritized, start putting some details around your budget. One way to start is by looking at last year’s results. By taking last year’s results and rolling them out across the upcoming year, you can start noticing opportunities. Maybe a large fee or expense last year won’t apply in this year’s budget. Or a significant invoice last year shouldn’t be expected again. Start to account for exceptional activity from the year previous to map out your future.

Then: You guessed it. Collaborate.

With a starting point, bring back your team or business unit leaders. Let them help you see what you don’t see. Understand any seasonality of your business. See where the need for new hires will impact planning. Explore salaries, bonuses and tax implications. With all these different data points your budget starts becoming more clear.

Budgeting vs Forecasting

Budgeting and forecasting are related and in many ways work in tandem, but they shouldn’t be confused for being the same thing.

Think of budgeting as plotting points on a map – it’s the destination where you want to arrive. With all things considered, your budget should quantify expectations for how you’ll arrive at your destination, or goal. Of course, knowing how to get to a place requires knowing where you are – your budget also represents your current financial position. Having a budget lets you compare realities to expectations towards reaching your goals. Your budget helps you manage cash flow towards your goals.

Forecasting accounts for the environment around you as you plot your points. What direction are you heading? Is there smooth sailing ahead that means you might achieve goals more quickly, or choppy waters that can slow you down or require you to change course altogether? A forecast relies on historical data and experience to guide future thinking.

Put The Right Positions In Play

In the budgeting and planning process it’s important to have a person running point – and that person should generally not be the CEO. The CEO has a vital visionary role, and those responsibilities can’t be carried out if they’re studying granular details. Look to your CFO to coordinate among business units and department leaders to help shape and guide a new budget. Let them gather facts, draw appropriate conclusions, and conduct variance analysis to help create a budget that’s realistic but allows for stretch goal-setting.

This is also where historical analysis from a financial leader like a CFO is valuable. Why were revenue goals missed last year or last quarter? Why was profitability higher than expected? Were sales projections met or missed, and why? There are often deeper answers to explore beyond the numbers, and the right financial leader knows how to dig into these. This understanding helps shape future forecasts and budgets.

Insight and Foresight for Better Business Planning

It’s the combination of historical study and analysis, collaborative present-tense business understanding and a forward-thinking mindset that crafts the most actionable budgets. Remember that all these perspectives are essential for planning and budgeting that isn’t just an arbitrary increase on years previous. Budgeting and planning requires insight and foresight to deliver meaningful, actionable guidance for your company.


Subscribe to Create The Next wherever you get your podcasts, including


This field is for validation purposes and should be left unchanged.