#2 Budgeting & Forecasting

A new way of budgeting

is the process in which one quickly and frequently draws up rolling monthly/quarterly forecasts with a lead time of up to one week.

Why is it so important?

• Setting short and long-term goals for the business growth

• Track revenue, expenses and cash flow

• Trim costs to avoid overspending

• Prepare for busy seasons and slowdowns

• Maintain a record of finances

Budgeting can take place for:

• households

• one's productivity per hour

• organizations

• departments, such as marketing

As we have established the definition of budgeting, we are now introducing the difference between a forecast and a budget.

🔺It seems very confusing, right?🔺

Budgets

🟢Static

🟢The old-fashioned way of budgeting takes place 1 a year, usually in Q4, before the next fiscal year.

🟢One has to understand the goals for next year from all company leaders and put together each and every input.

🟢Every member has to agree on the plan, as it will not change.

Forecasts

🟠Dynamic

🟠A forecast monthly budget update that adapts to the changing business landscape.

🟠One works with the leaders in the company, ensuring that each and every person understands what will happen and has visibility of each and every expectation.

💡Both are important in their own way💡

1️⃣Budgeting guides the organization's mindset towards success.

2️⃣Budgeting can help in finding unnecessary expenses, like unused subscriptions.

3️⃣Forecasting keeps things continually relevant.

What are your thoughts on this? Comment below.