Budgeting and Forecasting can prepare business owners by identifying impending financial difficulties and planning for capital needs. A forecast is a necessary part of any business plan and will be required when an owner is raising capital or applying for a loan.

The Strategic Planning is used to plan the longer term needs of the business and to improve strategic decisions. Spanning a three to five year time period this forecast communicates the forward looking health of the company.

The Operational Budget is used to improve day to day tactical decisions. Spanning a twelve to twenty four month time period this budget will aid in communicating the short term goals of the organization.

Working together the Strategic Planning and Operational Budget provide a road map for business owners to plan for the future needs of the organization and measure performance.

Strategic Planning applies forward thinking principals

  • Providing a framework for What-if analysis.
  • Identifying long-term risks and opportunities.
  • Estimating the impact of these risks and opportunities using sensitivity analysis, scenario analysis and ratio analysis.
  • Planning for future cash flow requirements.

Operating Budgets serve as a framework for productive discussions

  • Helping managers understand the business drivers.
  • Improving operating margins
  • Evaluating performance of products and staff
  • Communicating company-wide goals, changes and initiatives

External Estimates serve as a communication tool

  • Forecasting the expected future financial health of the business to lenders.
  • Reporting information required to maintain compliance with covenants.
  • Preparing board members for a supervisory review.
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