You may have heard this statistic before, but it bears repeating: in a survey of nearly 300 global executives by Bain & Co., only a third felt the strategy it produced met three vital criteria: bold ambition, adaptability in the face of changing market conditions, and concrete guidance for management and the front line.
Strategic planning is the cornerstone of most business success, but it doesn’t operate alone. An important way to improve your planning process is through corporate budgeting. The problem comes when budget and strategy aren’t aligned.
So, how can you use corporate budgeting to improve your strategic planning? These tips are a good start.
- Remember that strategic planning does not equal corporate budgeting.
Don’t confuse the strategic planning and corporate budgeting processes. They are not the same thing. Strategic planning is developing a vision for your company — where you want it to go and how you want it to get there. Corporate budgeting, on the other hand, is executing that strategy and making sure the steps needed are realistic and cost-effective. That can lead to some obvious challenges, but what’s important is that the two processes are kept in alignment and done at the same time.
- Keep strategic planning about the customer.
Often in strategic planning, it is very easy to be swayed by internal politics and market influences. Every department wants the most budget. New competitors are always coming onto the market. But if you focus your strategic planning on your targeted customer, what they want, and how you can offer them the best service and best value, you’ll be able to steer your business in the best direction and reflect those values in your corporate budgeting.
- Prioritize ruthlessly.
You can do anything, but you can’t do everything. It’s a simple statement, but one you need to incorporate into your planning. If you try to plan for growth in all areas of your business at once and allocate budget to all of those areas, you’re going to be spread very thin and likely not make much headway. There are exceptions, of course, but most of the time you achieve better business growth by focusing on two or three key priorities and giving them the bulk of the available budget.
- Use a rolling forecast and planning cycle.
Today’s market is changing so rapidly that sometimes creating an annual strategic plan isn’t enough. In order to be truly adaptable, your strategic planning needs to be ongoing — not just once a year. Giving your team flexibility to review the plan, for example, every quarter could give you a market edge. On the corporate budgeting end, some companies are eschewing annual budgeting for a rolling forecast. If this is the case for your business, make sure the two processes are in sync.
- Keep strategic planning high level.
Whether you’re reviewing the strategic plan on a rolling basis, or once a year, don’t get bogged down in the details. The best strategic planning is kept high-level — and you can find alignment with your budget on this, too. Decide your overall vision for the business, your top priorities, and allocate those resources to the budget. And then trust your financial and operating teams to use those resources in their departmental budgets and figure out the nitty-gritty.
Your corporate budgeting and strategic planning should inform and influence each other. While they may sometimes clash, achieving harmony can ultimately bring about better business growth.
What else brings better business growth? True Sky. You need corporate budgeting software that simplifies the process. True Sky’s budgeting software can help your company find alignment and remain fluid. Learn more at www.truesky.com or call 1-855-878-3759.