Planning & budgeting 25 th November, 2009 Eva Stevens Community Accounting Plus

Planning & budgeting What I hope to cover in this session What is a business plan? What is a budget? An example of how to use the CA Plus full cost recovery spreadsheet

What is a business plan? A business plan is a written document that describes an organisation, its objectives, its strategies, the market it is in and its financial forecasts. It has many functions, from securing external funding, to measuring success within your business.

Your Audience The business plan can be a useful tool in-house. Externally the business plan may be required by: Banks; External advisors; Grant providers; Possible purchasers of the business; Potential partners.

Useful tips A business plan is a “living document”, it needs updating as an organisation develops to stop the document becoming out of date; Be honest and objective, you don’t want to end up with unachievable targets; The plan should be kept reasonably short and presented in a professional style.

A business plan should include: An executive summary; A description of the business opportunities; Marketing and sales strategy; Your management team and personnel; Your operations; Financial forecasts and risk analysis.

The business planning cycle Review your current performance against targets; Work out your opportunities and threats; Analyse your success and failures; Look at your key objectives for the coming year; Identify resource implications and create a budget;

The planning cycle continued Define the new year’s financial targets; Conclude the plan; Review the plan and monitor performance regularly; Go back to the beginning and start again for the next year.

What is a budget and why should we have one? The plan of an organisation expressed in terms of money; Budgeting is essential for good financial management; A budget is a key element in establishing internal controls; Useful for planning, communicating, controlling, motivating and monitoring.

Before you start Incremental budgeting or zero based budgeting? Multiple budgets for different funds? When is the best time to prepare a budget? Who should be involved? Should the budget balance or not?

Where to start? The committee needs a plan for the coming year: Will you continue with the same activities as in previous years? Are there plans to try new activities or to expand? What are the specific goals for the next 12 months?

The next steps Consider your expenditure, take each category one at a time; Next look at your income, put down your most secure and important funding first; Put your income and expenditure together; Do you need to go back and make some changes?; Take the budget to your committee for approval.

Reports and monitoring To get the most out of your budget it is essential to monitor actual spending against the budget at least on a quarterly basis. Large differences between the actual and budgeted figures should be explained.

Useful websites For our budgeting spreadsheets go to “managing your finances” and then select “full cost recovery”