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7 Tips for Strategic Planning, Budgeting, and Management

7 Tips for Strategic Planning, Budgeting, and Management

AGB Consulting specialist and president emeritus of Guilford College is the author of Strategic Finance: Planning and Budgeting for Boards, Chief Executives, and Finance Officers.  Below, seven principles for strategic planning, budgeting, and management (excerpted and adapted for today's post).

A strategy-focused organization centers its finances and other components on its mission and goals. But what principles does the organization follow in planning, budgeting, and management?

A strategically focused organization endeavors to do the following:

  1. Link financial decisions to the mission and strategic direction of the organization. Undoubtedly, budgeting and other aspects of financial policy are more relevant if the institution has a mission or strategic vision that sets goals for instruction, research, and service.
  2. Determine the total costs of major goals and priorities. A strategic plan may be elegantly designed with a logical flow from the mission to the ultimate ends, incorporating the appropriate programs and strategies needed to accomplish them. Yet plans often fail when the price tag is seriously underestimated or even unknown.
  3. Link the annual budgeting process explicitly to the multiyear program and financial plan. The initial year in the long-range financial plan constitutes the first draft of the annual budget. If the financial plan properly documents all costs, it will have forecast revenues and expenses over five or more years.
  4. Pay attention to the human resources needed for the strategy to succeed. Strategy is as much about people as it is about money. Key constituencies must be involved in the formation of any plan or change in strategic direction. Genuine participation not only improves the quality of the final plan but also fosters understanding and acceptance. To accomplish this, the workloads and schedules of participating staff and students may have to be accommodated.
  5. Promote benchmarking and market comparisons. No strategy exists in a vacuum. A strategic plan pays close attention to the environment and the interests of significant stakeholders.
  6. Maintain flexibility by developing “what if” scenarios and contingencies. A strategy-focused organization views its assumptions as influenced by events and circumstances as well as by internal decisions to increase revenue or cut costs. Interest rates and endowment returns can rise and fall; government regulations can impose new burdens; local, state, or national administrations can turn over; and a host of factors can upset even the most diligently constructed plans.
  7. Persistently evaluate assumptions, actuals, and outcomes. A strategy-focused organization is continuously analytical. Strategic indicators, qualitative and quantitative, tether all levels and phases of the plan to reality.
Kent John Chabotar's book, Strategic Finance: Planning and Budgeting for Boards, Chief Executives, and Finance Officers, is an in-depth exploration of strategic planning and budgeting topics and actionable steps that boards, presidents, and CFOs can take to navigate a course of institutional financial stability.  Available in print and as an e-book on Amazon and Apple's iBookstore.
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