I came across this topic, budget vs. forecast – what’s the difference? In summary, budget focuses more on expenses and spending limits while forecast focuses on growth and long-term goals. There are some differences on how you analyze your numbers but at the end of the day you need both together for your business to thrive.
When discussing this topic with my clients, I do not ask to create a budget or do a forecast from financial statements. I believe that my client, upon hearing those words, would rather watch paint dry instead of tackling numbers on a spreadsheet. There is an expression that I heard that provides a different perspective and therefore I use it in my discussions. I use the word “Insight” instead of budget and the word “Foresight” instead of forecast.
As your trusted advisor, I will help you set goals, create a roadmap and point you in the right direction.
We will first create some insight on the business. We’ll discuss the operations of the business and review what has been working or not. We’ll also talk about spending habits, etc. Now we can take those talking points regarding your business (i.e. marketing, operations) that you understand well and we’ll convert these numbers into a budget (focus on expenses) without you feeling overwhelmed.
We will then shift our focus onto foresight because you can only limit your expenses by so much. For example, you can’t lower rent expense. The focus will be on long term goals and growth. As we again review what has been working or not, we can discuss how to increase revenue. Based on your industry, we will tailor the questions such as …. what if you do a price increase, create a new product, or upsell a maintenance plan? The idea is to break down the goal (i.e. 20% growth) into building blocks so that you can better see that goal becoming realistic and achievable instead of as a monumental task.
When you’re ready to take your business to the next level, give me a call.