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How to Approach a Financial Plan

· Finance,Management

When you are doing your annual plan, do you start with ‘the numbers’ or with a ‘narrative’ in which you set out your plans for the next 1 - 3 years? It is surprising how often organisations don't appreciate that these are two parts of the same process which need to run in parallel, each informing, improving and reinforcing the other.

Where to start?

It is usually a good idea to start developing ideas and a narrative plan first and the digital revolution helps here because it has created new tools which can help you make progress quickly.

It is also important to take a fresh look each year even if you don't feel the need to do a zero based budget or plan. This is especially so because since the digital revolution, technology and stakeholder changes occur in months not years, opening up new opportunities and creating new threats much more quickly than in the past.

There is one other thing about the digital revolution: it has substantially increased the need for investment, not just in technology and communications but also in training and the need for organisational development. This is because digital innovation flourishes much better in the right environment.

Refining and Testing the Plan

At some point, well before a plan is fully thought through, it is a good idea to start trying to generate some numbers. These by their nature are specific, requiring answers to such questions as the number of items in a given figure, the value of each item and when things will happen. The very act of trying to put numbers to a plan raises lots of questions which help to refine and develop the plan, making it better.

These questions also start to provoke other questions which are essential in developing a robust and realistic plan, such as:

  • if total costs are too great which activities are most essential - what are the pros and cons of not doing each different activity?
  • if the costs of an activity appear high are there alternative ways of doing the same thing or introducing innovations - perhaps digital ones?
  • which fundraising approach will provide the best return for the money spent and how quickly will that return be generated?
  • what are the risks involved in each type of income and expense - how might these be managed and how sensitive are the overall results if reality turns out to be different to your assumptions?
  • what various scenarios could occur which could affect the numbers

These questions, amongst others, help to create a dialogue between the different members of the planning team which help to ‘bottom’ and test the plan, making it robust.


Sometimes doing the numbers actually shows up that there is more scope to do things than you expected. In some cases you may even need to develop plans to spend more to prevent reserves becoming too high!

The Planning Team

To get the best contribution to the plan from running the numbers it is really important for the finance people in your planning team to have an open, constructive, can do approach and to communicate well. Finance is often seen as a control function which raises questions, comes with a sceptical and prudent approach, often saying ‘no’. It is vital that it does this, of course, including during the planning process - that is part of what is meant by financial control and real problems can occur when this part of an organisation’s culture has too low a profile. However, for planning purposes especially, a strategic can do approach is also important.

We can help you with your financial planning. Drop us a message, to get started.

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