Better Budgeting

By Rob Stephens, CPA

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Copyright 2023 by CFO Perspective, LLC
ALL RIGHTS RESERVED. NO PART OF THIS COURSE MAY BE REPRODUCED
IN ANY FORM OR BY ANY MEANS WITHOUT THE WRITTEN PERMISSION
OF THE COPYRIGHT HOLDER.
All materials relating to this course are copyrighted by Rob Stephens.
Purchase of a course includes a license for one person to use the course
materials. Absent specific written permission from the copyright holder,
it is not permissible to distribute files containing course materials or
printed versions of course materials to individuals who have not
purchased the course. It is also not permissible to make the course
materials available to others over a computer network, Intranet, Internet,
or any other storage, transmittal, or retrieval system. This document is
designed to provide general information and is not a substitute for
professional advice in specific situations. It is not intended to be, and
should not be construed as, legal or accounting advice, which should be
provided only by professional advisers.

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Table of Contents
Section 1: Budgeting Benefits, Challenges, and Basics ......... 4
1.1 Welcome and Overview ................................................................. 5

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Section 1: Budgeting
Benefits, Challenges, and
Basics

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 1.1 Welcome and Overview
Nobody ever said that budgeting is their favorite part of business
management. Most people would rank it as one of their least favorite
things. And yet, so many of us spend countless hours budgeting.
Budgeting is hard. It doesn't bring out the best in people. Everyone is
stressed. It's sometimes not very effective. Still, we think the pain is
worth the gain. We cling to time-worn practices, thinking it's the best we
can do.
There are options within and beyond traditional budgeting. Each
company should consider these options and decide which could improve
their budgeting process.
It's easy to use a similar budget process year after year. I hope this course
lets you look at your budgeting process with fresh eyes to see new ways
to budget and make business decisions.
These ideas may come to you as you reflect on the process you use. I
hope this course helps you better understand and achieve what you hope
to gain from the massive investment your company makes in the
budgeting process. For smaller companies that don't have a formal
budget process, I hope you find the right process for you.
I'll start this course by outlining the benefits and challenges of budgeting.
Throughout this course, I'll provide tips and alternative budget systems
that can mitigate these challenges and capture more benefits.
I'll then explain some basic budgeting skills. This will provide a few key
basics to those who don’t have them and fill some holes in knowledge for
others. I’ll also be pointing out budgeting issues during these basics. for
which I’ll provide suggestions later in the course. If these first few lessons

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seem basic to you, please be patient because I'll build on these to show
the pros and cons of later budgeting tips, ideas, and alternatives.
We'll next look at the Master Budget and the budgets that comprise it.
There's a method to the madness of when different types of assumptions
and calculations are layered into the budget. However, the process is not
entirely sequential. It abounds with iterative loops.
Every company is unique, so I may not cover the exact products,
departments, and items that apply to your industry. I will cover the basics
of a manufacturing company and a service company to provide examples
applicable to most companies.
Next, I'll talk about the budgeting process. The purpose and role of the
budget can best be explained in the context of strategic planning. We'll
explore which analyses can be done throughout the year to take pressure
off the very busy budgeting season. Some lessons cover the nuts and
bolts of budget reporting and budgeting tools.
I'll explore a series of budgeting alternatives in the final section of the
course. We'll look at rolling forecasts, zero-based budgeting, activity-
based budgeting, and many others. Each alternative has pros and cons
that I'll list.
Each lesson in this section gives an overview of the budget alternative to
help you decide whether you want to further pursue that alternative.
Even if you don't fully adopt these alternatives, you can find ideas to
improve your budgeting process.
Do companies fail from poor technical budgeting? No, they fail from poor
strategy and execution. The budget is the most thoroughly analyzed
financial forecast of strategy. For some companies, it's the only financial
analysis of strategy. To be effective, we must mitigate the decision-
making errors common to the budgeting process and look for ways to
better identify opportunities.

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The effectiveness of a budget isn't the precision of our forecasts, but the
quality of the decisions made in it. The goal of budgeting is to make good
decisions. It is then a reliable map for good implementation. Everything in
this course is focused on helping you make better decisions through
traditional budgeting or an alternative process.
I’m Rob Stephens, founder of CFO Perspective. CFO Perspective provides
tools and knowledge to make better financial decisions that lead to
superior business performance. During my career, I’ve been the CFO, SVP
of Finance, or Director of Operations of companies with just a few
employees to companies with $3 billion in assets and hundreds of
employees. I've been part of many budgets and I have the scars to prove
it.
I make courses for company employees, as well as for business advisors
like CPAs, coaches, and consultants. When I say “you,” I’m referring to
business owners or staff. If you are a business advisor, you can translate
“you” to mean “your clients” or “the business you work for.”
The titles for the teams or people that put together a budget are
different for each company. I refer to the Accounting, Finance, or FP&A
(Financial Planning and Analysis) function or department that usually do
this as “Finance” in this course for simplicity.