Organizational planning often focuses on designing team structures, creating roles and responsibilities, and determining how communication will flow across the organization. These tasks are important, but they must also be paired with budget planning.
Budget planning helps to ensure that you have the funds available to reach your organizational goals.
There are four budget types:
A zero-based budget assumes that every department begins with a budget of zero. Then, department leaders are expected to justify the funds they need to execute organizational plans and achieve goals.
Begin with your company’s desired outcomes. Then, determine the activities required to achieve those. Finally, create a budget based on the costs of those activities.
With incremental budgeting, take last year's budget figures as a baseline. Then, add or subtract a percentage to determine your budget for the current year. This may not work if you expect major changes like corporate restructuring.
Value proposition budgeting involves looking at every budget item individually to assess its actual value and justify its cost.
Follow these steps to create a budget to align with your organizational needs:
Your budget exists to ensure you have the funds to operate your business and achieve your goals. Set priorities that include the following:
If there are shortfalls, your list will let you know where it’s okay to make cuts.
List the costs that will not change during the budget period. These are the most predictable items in your budget.
List your variable costs. Then, create a close estimate of what they will cost. Consider using the previous year's numbers.
Work with your team to predict your income for the upcoming budget cycle. Be conservative.
Use a budget type that will work best with your organizational planning. Create a final budget based on the information gathered.
For the best results, take advantage of tools and technologies to efficiently create an accurate budget. Budgeting templates are one excellent resource that will help organize the planning process. Functionly can also be utilised for headcount planning budgets - try it for free.