4 Secrets to Make Budget Planning Work For You

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Posted by Dan Riley

October 19, 2016

forcasting_a_storm-1-742710-edited.jpgIt’s that dreaded time of the year. Time to start thinking about your department’s 2017 financial plan. And, no one knows the hardship more than me and my fellow finance professionals. 

As a finance professional, guiding colleagues through their budget plans is a painful insightful part of my job. It helps them get their upcoming year on the right track. A sound financial plan should be both well-structured and well-thought-out.


4 Secrets to Make Budget Planning Work for You

Whether you are trying to gather data that supports business cases for projects such as HR services or technology improvements, or if you are sitting down for the first time as a manager to forecast 2017, here are some things to think about, before you get started.


Work Backwards from Your Goals

Before there are any numbers on your 2017 financial plan, establish what goals you are trying to accomplish and make sure they align with those of the overall organization. Even though a budget is focused on one particular team or department, all departments should be aligned with the company’s vision.

Once you have established your goals, then you can work on filling out the numbers. Break down each goal, step-by-step, into manageable chunks of data. “Manageable” being the key word. Don't drive yourself crazy with the small things. We don’t want to see how much you spend on branded pens, but we do need to understand your overall costs for marketing materials and why you are investing money in those materials.

There needs to be a strategy behind those numbers. If you want an increase in your budget, you can’t let it be perceived as wasted money out the door. Needs and wants are two very different things. You need to prioritize and keep in mind that your spend needs to be seen as an investment.


Think Ahead, But Near-Term

A little contradictory, I know. But it’s a delicate dance of becoming overly-ambitious for the future, and being realistic about the short-term strategic goals of your budget. Think about the big picture and as forward looking as possible, while remaining tangible.  It may seem a little obvious to say it, but there is a big difference between a one-year outlook and a three-year outlook. 

You are consistently walking a fine line of how the short-term affects the long-term. The longer the outlook, the more conceptual the approach. For example, if you are managing an account at a client, try to analyze trends and find ways that existing work and relationships can yield more opportunities to get invoiced to provide a cushion in your budget. That cushion in your budget, if it remains at the end of year one, may be able to provide the funding for an initiative you may be planning for in year two. 

But also, think about near-term, actionable projects and their financial impact. A year is really a shorter amount of time than you think. The short-term budget is much more strategic than conceptual. You will need to focus on putting specific actions with the numbers you provide.


Bonus Tip: Don’t take the easy way out and just add 3.5 % to your budget and call it a day. Money can be spent very quickly, and before you know it, it can be mid-year 2017 and you have completely lost your bearings.


Document Everything

It’s very easy to get buried in the budgeting process. You may end up going in different directions, and then have no recollection as to how you arrived there. One of the biggest problems I see when managers approach me with their plan is that they come to me with numbers, but haven’t documented their thought process as to how they got there.

For a plan to be successful, it’s not just about the numbers, but you need to provide the logic behind your decisions. You can quickly get sucked into focusing on making the numbers on the spreadsheet add up. Then, when you come up for air, the numbers are all aligned, but you are unable to walk someone through how you arrived at that point.

When you are discussing your plan with the finance department, have a complete understanding as to where the money is going. Make sure to document any assumptions. That way, if you are asking for an increase, finance will understand fully why you are asking for it. Do your research and own your story. Can we prove it out or are you working on a hunch? Make sure you can point to everything and understand it completely or you will quickly lose credibility.


Don’t Be Scared to Ask for Help

Make sure you make use of the resources available to help move you through the planning process. Ask co-workers, superiors, and yes, the finance department.  We actually prefer to answer questions during your process so we don’t have to rework it when you present it to us. The finance department aren’t as scary as we may seem, I promise.

Remember, a plan is called a plan for a reason. It’s an educated guess. Anyone who claims they know what's going to happen is lying to themselves. There is always going to be unexpected things that arise during the year. All you can do is know your goals, do your research, and own your knowledge to make the best financial plan that outlines the goals and projected successes of your portion of the business. 

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About the Author: Dan Riley is a manager in the finance department for Yoh.  He holds an undergraduate degree in Finance and Marketing from Drexel University and an MBA from Saint Joseph’s University. 

Topics: Workforce Planning

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