Road Map for Success: Budgets, Forecasts, and Projections

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Dan WeissMany factors contribute to organizational success, including good ideas and good people.  Without either one, most entities will fail.  On the other hand, while good ideas and good people may be critical to success, they aren’t enough. You’ll need a road map for success, including budgets, forecasts, and projections.


First, you need to have a plan.  This requires assembling multiple stakeholders and getting away from the daily grind of “busy work.”  The process will take discipline, determination, and patience.  Ultimately, you’ll have a picture of how you want things to look in the future.


If you succeed at developing a plan, the next step is execution.  Of course, this is the really tricky part. Putting the plan into action and reaching your goals has ongoing pitfalls, which is why it’s so important to follow a “road map.”

Tools for Success

What does a road map for your organization look like? Budgets, forecasts, and projections (oh, my)!

  • Budgets (i.e., your goals) – Your budget represents what you want to happen in the next twelve months. But budgets dictated by managers are rarely met and then only through dictatorial processes. A “bottom-up” budgeting process that includes all staff members will result in the most reasonable and dependable budget.
  • Budget measurement – It’s not enough to create a budget if you don’t use it. That means you need to generate a monthly budget comparison to compare actual results against budget expectations. When the results are on track, it’s an opportunity for positive reinforcement. When the results are not on track, it’s an opportunity for adjustment. Only by continuously measuring and adjusting can an organization stay on the path to its goals.
  • Forecasts (i.e., your expectations) – Your forecast tells you how the next twelve months will look if things continue as they are. Typically, you’ll use your most recent financial results to make monthly adjustments to your twelve-month forecast.
  • Projections (i.e., your plans) – Projections allow you to apply different “what-if” assumptions to your forward thinking. For example, if we raise prices by 5%, and sales volume decreases by 2%, how will it affect the bottom line?
Making Adjustments

When you want to reach a destination, you point yourself in a direction and go. But that doesn’t mean you don’t periodically check your direction to make sure you’re still heading toward the target. If you were hiking through the woods, would you expect to continue walking in a perfectly straight line until you reached the other side? No, you would probably check your compass every now and then to make sure you’re still heading in the right direction.

Likewise, you should expect the path to organizational success to be a wavy one. You’ll rarely travel in a straight line, and you’ll need to know where you are in order to make adjustments along the way. Without the necessary financial tools, like budgets, forecasts, and projections, you’ll just be wandering in the woods.


Dan Weiss, founder and President of Counterpart CFO, leads a team of flexible, part-time CFOs specializing in nonprofitsTo read more from Dan, follow him on LinkedIn or subscribe to his blog at

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