Scribd
Upload
81 views15 pages

Budgeting and Forecasting Insights

The document discusses budgeting and forecasting for companies. It notes that budget preparation takes around six months but budgets are often ignored for the following six months. Managers see budgeting as a negotiation rather than planning tool. Budgets are also seen as irrelevant at the local level and unpredictable. The document outlines key questions for planning like objectives and stakeholders. It also discusses factors to consider when predicting revenue and understanding cost structures like fixed versus variable costs.

Uploaded by

Shane Reinhart
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
81 views15 pages

Budgeting and Forecasting Insights

The document discusses budgeting and forecasting for companies. It notes that budget preparation takes around six months but budgets are often ignored for the following six months. Managers see budgeting as a negotiation rather than planning tool. Budgets are also seen as irrelevant at the local level and unpredictable. The document outlines key questions for planning like objectives and stakeholders. It also discusses factors to consider when predicting revenue and understanding cost structures like fixed versus variable costs.

Uploaded by

Shane Reinhart
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 15

Forecasting and budgeting

with Carl Weldon CEO, BAHA and Debra Adams, arena4|finance

Budgeting and forecasting some thoughts

Companies can take at least six months to prepare a budget and the other six months ignoring it.
Budget preparation average of 110 days start to finish (1995 Price Waterhouse study)

Managers view budgeting as an exercise in negotiation and trading of targets.. In a changing business environment what is the point of budgeting and planning? The value is in the process ?

The trouble with Budgets is


Seen as a Finance dictatorship with little local relevance Dependent on support (IT & Human) Detailed Unpredictable - iterations, direction

Planning your journey

Would you start out on a long journey to a new destination without a route map?

First some key questions!

Why are we in business? What are we trying to achieve ? Who is interested in how our business performs?

How much profit should we make?

As much as possible? More than last year? To meet or make more than budget? Depends on the sales? What about cash flow?

The Plan
Plan & Strategy

BUDGET

Sales Plan

Forecast
Control & Plan

Whos in the loop?


Shareholders Employees

Suppliers

Managers

Performance
Community Government

Customers ?

Steps in the planning process


Determine overall objectives Sales and marketing plan Determine rooms revenue Food and beverage revenue / Other revenue Cost of sales/Margins Payroll Other departmental expenses - variables Administration and other areas Fixed / Property costs Capital expenditure budget - effects Total budget

Lets get serious!


Predicting revenue Selling price Volume (New / Repeat customers) Sales mix Capacity management
Understanding the cost base Direct / Indirect costs Fixed and variable costs

Use of Technology - spreadsheets

Predicting Revenue

Factors which drive performance: Make a list of the trends, economic factors and competitive influences that you think will effect your business over the next twelve months. Note your assumptions clearly

How will these factors effect your business?

Government Demographics Socio-cultural Technology

Labour markets Competition Economy Suppliers

Understanding the cost structure


Direct and indirect costs
product or department orientated costs vary with sales Overhead costs

Variable costs and fixed costs


attempts to reflect how cost changes with volumes of business

Understanding how we performed


There are many potential causes for variances between actual and planned: economic, social, legal and political changes changes in competition changes in supply conditions changes in operating systems inefficiencies

Asking the right questions

What are we trying to do? What is stopping us from doing it? What can we do about it?
Do you know more about your business than when you started ?

You might also like