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© 2024 N. Dean Meyer and Associates Inc.
Excerpt from www.NDMA.COM, © 2024 N. Dean Meyer and Associates Inc.

Analysis: Why Integrate Business and Budget Planning

the one-year plan for business, resources, investments, budgets and rates

by N. Dean Meyer

Business planning defines what your managers will deliver in the year ahead, how they'll produce it, and what resources they'll need to do so.

Strategy is important, but business (tactical) planning is essential -- it's foundational. Without effective business planning, execution of strategy (or just keeping the business running) is extremely difficult.

World-class organizations adopt a disciplined approach to business planning. They document a step-by-step method that engages all their managers in planning their respective businesses and their interdependencies. Done well, it cultivates entrepreneurship, improves efficiency, coordinates resources, and justifies investments.

How Business Planning Works

What's in a good business plan?

It begins with a definition of the lines of business under each manager and the products and services each might deliver.

Lines of business
Product/service catalog

Then, each manager documents expected "sales" of those products/services by each line of business. These deliverables constitute the actual business forecast on which the rest of the plan is built. In addition to assured business ("keep the lights on"), managers document speculative projects/services clients might choose to fund over and above the base.

"Sales" forecast
Growth plan

Investments in your own capabilities (eg, infrastructure) are projects in themselves, and are also documented as deliverables.

Investment (capital) plan

When teamwork is required among groups, managers coordinate their deliverables so that each group plans its share of each project/service. This is the first step in project planning (though more detailed project plans are done separately).

Project planning

Each deliverable has a direct cost (including staff's time). Managers also plan their indirect costs, including "unbillable" time (eg, for professional development), indirect costs (eg, training, rent), and the services they'll need from one another (eg, when engineers work on a service group's infrastructure as opposed to a client project).

Cost management

Finally, all this information is assembled into a budget -- both a traditional view of the expense codes by group and a cost estimate for the various client deliverables and internal investments.

Perception of value
Fact-based budget negotiations
Managing expectations

A price list may also be extracted from this data.

Service rates


A disciplined approach to business planning has both business and cultural benefits; it:

  • Ensures that budgets and rates are driven by the expected deliverables, managing clients' expectations to match available resources

  • Provides a basis for business-driven portfolio management

  • Makes costs transparent, and clearly tied to business results

  • Plans for potential growth

  • Clarifies the organizational structure and precisely who's to do what, establishing a basis for project planning and enhancing teamwork by defining every group's involvement in each project/service

  • Reinforces customer focus by identifying the customers for all projects/services, both client and internal

  • Builds a results orientation through clearly defined deliverables

  • Coordinates capital investments for an entire department/organization

  • Cultivates entrepreneurial thinking

An integrated business planning, budget planning, and product/service costing process implements a discipline of planning -- and much more.

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