forecasting and budgeting with carl weldon ceo baha1829

8/3/2019 Forecasting and Budgeting With Carl Weldon Ceo Baha1829

1/15

Forecasting and

budgeting

with Carl Weldon CEO, BAHA

and Debra Adams, arena4|finance


2/15

Budgeting and forecastingsome thoughts

Companies can take at least six months toprepare a budget and the other six

months ignoring it. Budget preparation average of 110 days start to finish (1995 PriceWaterhouse study)

Managers view budgeting as an exercisein negotiation and trading of targets..

In a changing business environment whatis the point of budgeting and planning?

The value is in the process ?


3/15

The trouble with Budgets is

Seen as a Finance dictatorship

with little local relevance

Dependent on support (IT & Human) Detailed

Unpredictable - iterations, direction


4/15

Planning your journey

Would you start out on

a long journey to anew destination

without a route

map?


5/15

Why are we in

business? What are we trying to

achieve ?

Who is interested in

how our businessperforms?

First some key questions!


6/15

How much profit should we make?

As much as possible?

More than last year? To meet or make more

than budget?

Depends on the sales?

What about cash flow?


7/15

The Plan

Plan & Strategy

BUDGET

Sales Plan

Forecast

Control & Plan


8/15

Whos in the loop?

Shareholders

Suppliers

Community

Employees

Managers

Government

Performance

Customers ?


9/15

Steps in the planning process

Determine overall objectivesSales and marketing planDetermine rooms revenue

Food and beverage revenue / Other revenueCost of sales/MarginsPayroll

Other departmental expenses - variablesAdministration and other areas

Fixed / Property costsCapital expenditure budget - effects

Total budget


10/15

Lets get serious!

Predicting revenue Selling price

Volume (New / Repeat customers)

Sales mix

Capacity management

Understanding the cost base

Direct / Indirect costs Fixed and variable costs

Use of Technology - spreadsheets


11/15

Predicting Revenue

Factors which drive performance:

Make a list of the trends, economic

factors and competitive influences thatyou think will effect your business over the

next twelve months.

Note your assumptions clearly


12/15

How will these factors effect yourbusiness?

Government

Demographics

Socio-cultural

Technology

Labour markets

Competition

Economy

Suppliers


13/15

Understanding the cost structure

Direct and indirect costs

product or department orientated

costsvary with salesOverhead costs

Variable costs and fixed costs

attempts to reflect how cost

changes with volumes of business


14/15

Understanding how we performed

There are many potential causes for

variances between actual and planned:

economic, social, legal and political

changes

changes in competition

changes in supply conditions

changes in operating systems

inefficiencies


15/15

Asking the right questions

What are we trying to do?

What is stopping us from doing it? What can we do about it?

Do you know more about your

business than when you started ?

forecasting and budgeting with carl weldon ceo baha1829

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