Developing Budgets & Financial Plans SEBC_BFP
Public corporations must produce annual audited statements, but that only reflects the previous operating year, often compared with even older operating years. Even for companies that are doing well stakeholders increasingly ask about future plans, so in addition they often have to produce an annual budget and financial forecast to ensure investor confidence. This can be quite a challenge when most of their financial people are focused on the annual report, which may be an opportunity for providing consulting services to build a more detailed version of the business plan to illustrate the intent of the business management to take measures that will ensure the long-term viability of the business as an investment opportunity.
Savvy entrepreneurs realize that it is not merely the investors that have a vested interest in the future of their business, they need to know when new initiatives are called for to create product or service plans that will generate future revenue when current products or services mature and potentially go into decline. There are different scenarios – sometimes you need to produce new marketing plans and/or business plans to evaluate the risk and opportunity of rejuvenating the existing products or services first. Eventually there is a need for replacement: the trick is to see change in time to respond to changes in market interest in your products or services. While most accounting systems provide an opportunity to carry budgets to track actual results against, they generally do not have the inherent capacity to simulate “What If” scenarios because, after all, as accounting systems they are focused on the dark regions of days gone by.
With an annual budget model we can establish the expectations for a 5-year outlook broken into monthly budget targets that we must meet in order to end the fiscal year on a high note. When accountants keep track of actual results they should red-line any items that fail to meet targets. If the accounting system cannot do that, we can do that by incorporating 12 actual months next to the corresponding 12 budget months and highlighting results that fail to meet expectations. So instead of discovering a year after the fact that consumer tastes have changed, or that some competitor has come out with a better mousetrap, the entrepreneur can get an early warning of potential problems almost the moment it begins to happen (in fact, consumers may try the new product or service, but that does not mean they will stick with it). Even if the competitor does not succeed immediately the entrepreneur can decide if it is worthwhile trying to revitalize that product or service, or to replace it with something bigger and better.
This opportunity carries the elements of the Marketing Plan and Business Plan that are related to new initiatives, and extends the service potential as an annual, on-going source of revenue. To prepare for this opportunity we recommend the following training programs:
Bookkeeping and Accounting
This is part of our complete business management training to provide the necessary foundation for business management and, therefore, this opportunity. We use an Excel™-VBA workbook to perform many of the cases in the accounting studies and to prepare for commercial accounting systems like Sage 50 ERP™ or QuickBooks™ that may be used in business organizations that would become our clients.
Finance
This is a part of our complete business management training that goes into depth to explain the nature of budgeting, planning, and investment activities. This is also where we look into the use of Excel™ to generate budgets and forecasts, and to evaluate financial results using ratio analyses that lenders may apply to our model results.
Developing a Business Plan
This is a part of our complete business management training where we explore a business idea and work out the viability of that idea by creating a solid business plan. We use Excel™ to “number crunch” the collected data to determine if there is, in fact, business potential that would entice a prospective lender to provide financing.
Developing a Marketing Plan
This is a part of our complete business management training where we explore a business idea and work out the viability of that idea by creating a solid marketing plan. This is a reflection of a competitive analysis (SWOT) where we use Excel™ to “number crunch” the collected data to determine if there is, in fact, business potential based on a latent demand for what we have to offer.
Financial Planning & Budgeting
This is a ready to use budgeting and forecasting system, largely based on Excel™ cell formulas to make it easier to adapt to a specific corporate structure. It is the “missing piece” of most accounting systems, and because it is an Excel™ application you should have little problem migrating the resulting budgets to a client’s accounting system.
Business Plan Modeling
This is an additional training program that explores how we build variations and assumptions into the client-side of the Business Plan Workbook. This is needed to adapt the model to unusual business ideas that require a much more in-depth approach than what is incorporated in the standard model we use for training purposes.
Marketing Plan Modeling
This is an additional training program that explores how we build variations and assumptions into the client-side of the Marketing Plan Workbook. This is needed to adapt the model to unusual business ideas that require a much more in-depth approach than what is incorporated in the standard model we use for training purposes.
Excel™ Cell Formulas – Introduction
This course provides a more thorough background in customizing Excel™ Cell Formulas to change the user-modifiable calculations within the model. Depending on how expert you want to be when you start out it may be worthwhile to get deep inside Excel™ to discover how you can develop sophisticated calculations.
- marketing
- design
- consulting
- production
- compared to the marketing plan and the business plan the range of values associated with different parameters is much less extreme and more likely to reflect an optimistic / likely / pessimistic outlook. the only limitation is that each sbu must be processed as a separate simulation (in a separate worksheet) to that there is no contamination between sbus possible. the process is not difficult: you open the worksheet and click on [run] to let the vba-based engine to its work. when done, you open the next one to repeat the process, and so on, until finished.
- information
Companies should pay serious attention to this notion of using budgets as an early warning that business is not as expected, so that they can have an opportunity to take remedial action long before the problem may become obvious at year-end. The marketing focus will typically be presentations or “white papers” aimed at the executives of companies that may not have an equivalent in-house capability. With increased exposure to liability if they do not demonstrate due diligence executives will short-change themselves by not taking this planning seriously.
The key to success is to speak their language – one of the reasons we recommend the training program (which you may expand based on the rich selection of courses we offer), so that there is a clear understanding of what you provide and how that benefits a company (if only to get more value from expensive accounting software). A major part of our success strategy is that we do not knock the accounting software the company already uses – we simply enable a key component that most of these products hardly support. Sure, you can enter a budget, but how do you produce those budget numbers? How do you explore the possibilities?
It is not by accident that this opportunity is a companion to developing marketing plans or business plans, because sometimes the key to success is to go back to the basics and explore if there is life left in some of the products and/or services that have grown a beard.
Financial Planning & Budgeting
This is our ready to use budgeting and forecasting system, largely based on Excel™ cell formulas to make it easier to adapt to a specific corporate structure. There is a simulation engine for optimistic vs. conservative forecasting, but the objective is not to find the optimum investment, but to confirm that based on assumptions the cash flow remains healthy. The model is based on a 5-year detailed forecast, to look at the impact of assumptions beyond the upcoming fiscal year, which is also a feature many accounting systems shy away from.
The budget year (typically the upcoming fiscal year) is only the first of a series that may see drastic changes in selected products and/or services, which means that the traditional accounting approach to budgeting (straight percentage growth) can be as useless as not using a budget at all. The key to this exercise (and the potential for a lot of billable hours) is to break out the contributing SBU (strategic business unit) contributions so that each can be evaluated as an independent business component. You do not want stars, cash-cows, and dogs mixed into one financial model that merely averages out the results. We have a simple way of consolidating information across SBU worksheets that also features a possible comma-delimited interface file to import the budgets to a formal corporate accounting system.
Financial Planning & Budgeting
Segregated from accounting, this process enables executives to objectively look at SBU (strategic business unit) results based on different assumptions. We can organize the model into SBU segments by making a replica of the worksheet for each SBU, and calculating the budgets separately. Each worksheet will be named starting with SBU, like “SBU-Widgets” and “SBU-Service”, while one worksheet will be called “Consolidated” in order to collect the contributions from each of the SBU worksheets. This is all automatic: you normally start with the final consolidated worksheet that has every category defined, and then you do some Excel™-magic to replicate and rename worksheets for each SBU.
As far as the work effort is concerned that can be as little as a week to create the master worksheet, and then a day per SBU to create the initial budget forecasts. However, then is when you really start interacting with the SBU management to learn the ins and outs of what is in store (after all, they are the ones holding the bag), so in case of an SBU with a declining revenue we can take several days to sort out what they may be willing to commit to. It is quite possible that this is the most input executives have had into their own accounting and reporting process, so the first time you do this may be a much slower process than in future budgeting cycles when they have a better handle on how the process will be conducted. By the same token, it is that same familiarity with the process that encourages repeat business, so you may end up doing the budget planning for many years to come.
Compared to the marketing plan and the business plan the range of values associated with different parameters is much less extreme and more likely to reflect an optimistic / likely / pessimistic outlook. The only limitation is that each SBU must be processed as a separate simulation (in a separate worksheet) to that there is no contamination between SBUs possible. The process is not difficult: you open the worksheet and click on [RUN] to let the VBA-based engine to its work. When done, you open the next one to repeat the process, and so on, until finished.
The key reason is that when you are exploring “fine tuning” specific SBU estimates you do not want the overhead of having all SBUs re-calculated when there are no changes. For a cross-SBU consolidation you simply open the “Consolidated” worksheet, and the VBA engine will collect the SBU information into the consolidation without complications of cross-worksheet references. Similarly, to create an interface file to transfer the budgets into a specific accounting system all you do is open the “Interface” worksheet to pull the data together into a comma- or tab-delimited text file ready for import.
Learning Formats SEBC_BFP
This course is currently available in a classroom setting (public or company private) with approximately 30 contact hours. The intent is to perform an actual business plan exercise to confirm the student understands it.
PDF – Certificate Of Completion
Each course offers a certificate of completion that identifies the course, the student, and a brief description of the course. To receive a certificate the student must have attended at least 80% of the course sessions. This personalized certificate is forwarded to the student by Email.
PDF – Course Notebook
Each course includes a notebook in PDF format that provides the minimum knowledge the student must master in order to obtain the certificate. In the notebook you will find references to other study materials. Students receive the notebook by Email when their registration is confirmed.
PDF – Program Overview
An overview of this study program can be downloaded from the website by right-clicking on the program link on the enquiry page.
PDF – Current Training Schedule
A list of upcoming training sessions can be downloaded from the website by right-clicking on the schedule link on the enquiry page.
Registration – Service Providers
To register for any training course please look on the enquiry link page of your service provider (from where you accessed this website). On the page you will find a registration request form where you can order the course that you are interested in. The availability dates will be provided to you, along with payment instructions if you decide to go ahead.
|