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The Essential Guide to Business Budgeting
Rating: 3.9 out of 5(69 ratings)
287 students

The Essential Guide to Business Budgeting

Because effective budgeting is key to any leader’s ability to successfully operationalize strategy
Created byBrenda van Camp
Last updated 7/2018
English
English [Auto],

What you'll learn

  • In this 2-part course we will cover both the operating budgeting process and the capital budgeting process. By the end of this course, you'll feel fully equipped to prepare an operating budget which helps you successfully execute your strategy as well as know how to navigate your company's capital budgeting process when you need to gain approval for a capital expenditure.

Course content

2 sections • 19 lectures • 59m total length

  • Introduction4:00

    Budgeting operationalizes strategy by detailing activities and resources and guiding a yearly flight plan. Avoid common pitfalls, and learn to prepare, sell, and use operating budgets as a management tool.

  • Overview of the 4 key steps of the budgeting process4:44

    Treat budgeting as a flight plan that translates company goals and strategy into department goals, guiding the four steps of the budgeting process from planning to consolidation.

  • Understanding the difference between the budget and the forecast1:57

    Differentiate budget and forecast: the budget is a plan for income and expenses, while the forecast estimates actual results and indicates needed course corrections.

  • Step 1 of the budget process: Clarify, clarify, clarify1:40

    Clarify the budgeting process by defining guidelines, timing, and responsibilities, then understand each line item and seek finance input to ensure accurate, timely budgets.

  • Step 2 of the budget process: Understand the past4:20

    Analyze last year's actuals and budgets to identify drivers, including external factors, then collaborate with your team to review three years of data and plan carry-forward changes.

  • Step 3 of the budget process: Polish your crystal ball2:28

    Polish your crystal ball by analyzing six questions on technology, economy, competition, customer demand, policies, and internal factors to forecast revenues and costs for the operating budget.

  • Step 4 of the budget process (part 1): Avoiding the planning fallacy4:12

    Learn how cognitive biases like the planning fallacy and optimism bias, plus organizational pressures, skew budgeting estimates and improve projections by bypassing these biases.

  • Step 4 of the budget process (part 2): Avoiding the planning fallacy5:53

    Apply reference class forecasting to counter planning fallacy by analyzing similar past initiatives and revising budgets; then build flexibility and stress test with what-if scenarios.

  • Getting your budget approved2:03

    Learn how to get your budget approved by aligning with departmental profitability and growth, addressing decision makers' concerns, previewing key assumptions, and responsibly tweaking budgets through collaboration.

  • How to use your budget as an effective management tool7:04

    learn to treat your budget as a daily management tool, using it as a benchmark, tracking deviations, and making tactical adjustments to stay on the original budget goal.

Requirements

  • No requirements! Just a willingness to do some work, because you cannot strengthen & develop your budgeting skills by just watching the class videos. The real learning is in completing the accompanying exercises which are build into this class. So you have to be willing and able to take some time to complete those exercises.
  • You do not require previous knowledge on this topic - I will take you step by step through the different concepts presented in this course

Description

This 2-part course covers both the operational budgeting process and the capital budgeting process.

In part 1 of this course we focus on how to prepare an operating budget. Done well, a budget provides a clear flight plan for where the organization wants to go in a given year, what route it plans to take there and what resources it will need to do so. However, unfortunately few budgets are done well and even fewer leaders use their budget effectively on a day-to-day basis to manage their department, business unit or division.

So, to help you buck that trend we will teach you a 4 step process to help you prepare a really good budget and we will also discuss in detail how to use your budget as an effective management tool.

In part 2 we then focus on the capital budgeting process. This is the process of allocating resources for major capital expenditure or investment expenditures. Leaders throughout a company will need to know how to work through this process as and when their strategic plans for their department or division involve significant capital investments. It varies by company what the actual threshold is at which a company requires its leaders to go through this process for approval. It can be as low as $1000 or as high as $50,000.

We will explore in detail how to analyze any proposed capital expenditure and how to make recommendations based on the outcomes of those analyses. This will involve a review of the following 4 capital budgeting methods:

  1. Payback period

  2. Net Present Value

  3. Internal rate of return (IRR)

  4. Profitability index

After working through this part of the course you should feel fully equipped to successfully handle your company’s capital budgeting process as and when you need to gain approval for key capital expenditures.

Note: At the end of each section you'll find a downloadable copy of the syllabus for that section of the course.

Who this course is for:

  • Any non-financial manager or leader who wants to master the art of effective budgeting

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