Budgeting and forecasting
A budget is a promise you make to yourself in January. A forecast is what you now expect, updated as the year unfolds. Most BC companies have neither, or have a budget that was built once for the bank and never opened again. We build an annual plan tied to how the business actually makes money, then keep it alive with a rolling forecast and a monthly variance review that tells you what moved and what to do about it.
What you leave with
You have an annual plan the team owns, a rolling forecast that is right more often than it is wrong, and a monthly review that leads to decisions.
Who it is for
- Owners who set a revenue goal each year and have no plan for the costs underneath it
- Companies whose bank or investors now expect a budget and quarterly updates
- Management teams that argue about spending because nobody agreed the numbers first
What we deliver
- An annual budget by month, by department or line of business, built from drivers rather than last year plus a percentage
- A rolling 12-month forecast refreshed every month
- A variance report that explains the gap between plan, forecast and actual in plain words
- Headcount and capital plans tied to the revenue plan
- Scenario versions for the downside, base and upside cases
- A budget calendar and owner for every line
How it runs
01Drivers
We identify the five to ten things that actually drive your revenue and cost, such as jobs per week, average ticket, crew count and lead volume, and build the plan on them.
02Build
We build the budget by month with the managers who will own each line, so the numbers are theirs rather than ours.
03Reforecast
Every month we replace the past with actuals, update the drivers and reforecast the remaining months.
04Review
A monthly meeting reads the variance report, agrees the corrections and records the decisions.
Engagement and fees
A Workshop of two to four weeks at $30K to $80K to build the first budget and forecast model. Monthly reforecasting and the variance meeting continue under an Advisory Retainer at $8K to $25K per month or as part of a fractional CFO seat. Every engagement is scoped after a call and confirmed in writing. See consultations and fees.
Why last year plus ten percent fails
The most common budget in a growing company is last year's actuals with a growth percentage applied to every line. It fails because costs do not move in step with revenue. A new crew adds a truck, insurance, tools and a supervisor in lumps, not in percentages. Rent steps up on renewal. Software seats are added one at a time.
A driver-based budget starts with the operating facts. How many jobs can a crew do in a week. How many leads does a salesperson close. What does a new location cost before it earns. When the plan is built from those, a change in one assumption flows through to revenue, cost and cash together, and the budget becomes a tool for deciding rather than a document for filing.
The rolling forecast
An annual budget is set once and goes stale by spring. A rolling forecast keeps twelve months in view at all times. Each month the completed month becomes actual, the next eleven are updated for what you now know, and a new month is added at the end.
The value is in the comparison. Budget shows what you intended. Forecast shows what you expect. Actual shows what happened. The gap between budget and forecast is a planning problem. The gap between forecast and actual is an execution problem. Keeping them apart tells you which one you have, and that changes what you do next.
Variance reporting that leads somewhere
A variance report that lists forty lines with red and green arrows is read once and ignored. The report we build names the five variances that matter, explains each in a sentence, and attaches a decision. Revenue short because lead volume fell, not because close rate fell, so the fix is marketing, not sales training.
This is the monthly meeting most companies your size do not have. It takes an hour. It needs the budget owner for each line in the room. It ends with a list of decisions and the forecast updated. Over a year it does more for profit than any single cost cut, because it catches drift while it is still small.
- Monthly income statements for the last 24 months
- Payroll by role, headcount plan and known cost changes for next year
- The operating numbers you already track, such as jobs, leads, orders or billable hours
Industries where we run this most
Questions about this service
How detailed should a budget be for a company our size?
Detailed enough that each line has an owner and a driver, and no more. Twenty to forty lines by month is typical for a company under $10M. Beyond that the detail costs more to maintain than it returns. Depth goes into the drivers, not into the number of accounts.
What software do you use for budgeting?
For most companies between $500K and $30M, a well-built spreadsheet connected to the accounting data is enough. Where the company has several entities or locations, we recommend and set up a planning tool that connects to QuickBooks Online or Xero. The tool matters less than the monthly rhythm.
Can you build a budget for a bank or an investor?
Yes, and we build it so you can run the company on it afterwards. A lender wants to see the assumptions, the downside case and the cash covenant headroom. We present it with you and update them quarterly.
We missed last year's budget badly. Is that normal?
Yes, and it usually means the budget was set from a wish rather than from drivers. The fix is not more optimism or more pessimism. It is a plan built on operating facts and a monthly reforecast that corrects course early instead of at year end.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.