Business Planning
Turning Budgets and Forecasts Into a Plan You Follow
5 min read
A budget that is written once and filed away has no effect. A budget compared to actuals every month changes behaviour.
Build the budget from drivers
Start with volume, price and capacity rather than last year plus a percentage. Driver-based budgets are easier to explain and much easier to adjust when conditions change.
Report variance monthly
The value is in the difference between plan and actual, and in the conversation about why. Small monthly corrections beat one large annual reckoning.
Attach actions to the numbers
Every material variance should end with a decision: adjust pricing, change spending, or revise the plan. Without that step, reporting becomes a record rather than a tool.
A plan works when it is reviewed. Monthly reporting is what turns a budget into management information.
