Budgeting & Forecasting

Providing Budgeting, planning and forecasting (BP&F) as a three-step strategic planning process for determining and detailing the organization's long- and short-term financial goals

In respect of Forecasting (may be classified into 3 types-qualitative techniques, time series analysis and projection, and causal models) : accumulated historical data and market conditions are deployed to predict financial outcomes for future months or years:

  • Gathering past and current data
  • Performing a preliminary analysis
  • Setting a time frame for the budget
  • Establishing revenue expectations
  • Establishing projected expenses
  • Creation of a contingency fund
  • Implementing the budget- on the basis of various techniques such as Activity-based, Value proposition, Zero-based or Cash flow budgeting.

Creation of Business plan (basic elements: 3M’s- Machine/ matter, men and money): 5-step model is followed in drawing up a business plan –

  • Business description – Type of industry, Product profile, Manufacturing process, Trade practices, Organisation culture, machinery/ concept requirements
  • Competition matrix – defining the edge, product offering, geographical or pricing or service dynamics, best case/ worst case scenarios, SWOT analysis, etc
  • Marketing – Strategy, market positioning, opening up of multiple channels, identifying target customer base, synergising with other market players (wherever feasible), framing result-oriented budgets, etc
  • the above 3 comprise the first M (machine/ matter/concept requirement) of the of any business
  • People – This is the second M in terms of order – comprises of the personnel required based on the business functions and Org structure, designing KRAs (Key result areas) for functional heads, fixation of R and Rs’ (Roles and responsibilities)
  • The most integral part – the 3rd M (Money) – which should corelate with business plan – financial projections to culminate into a business valuation, realistic capturing of the resources (capital and revenue in nature) required, revenue / cost estimations, computation of key financial indicators, preparing a contingency budget, designing a monitoring mechanism, etc

The next step being Financial modelling, whereby a process of gathering information from forecasts and other data is done, followed by simulating of discrete scenarios to analyse what impact they might have on the company’s financial health.