When to Do Annual Planning vs. Budgeting?
Each year, we put together a financial budget for the upcoming year. We try to anticipate what the new year will bring in Revenues and Expenses, whether that is by calculations, growth patterns, or wish list items. We add variable expenditures not knowing if they will get priority or not.
Traditionally, most companies create their financial budget before their annual planning session. But, why wait?
Having your annual planning session early before the budget will help you build the important key decisions that you make with your team into your budget. This way, you will do the following:
- Spend money on the correct priorities.
- Know that you will be able to allocate the resources you need to achieve your Annual Initiatives.
- Avoid the back and forth questioning regarding approval by the executive team.
You need to make sure you have the funding to do the items you planned for, and that you are not funding something that has no alignment with your Annual Plan. Therefore, Plan – then, budget to have a great year!