What tools and techniques can you use to align your budget with your strategic plan?

1 Strategic planning process

Before you can align your budget with your strategic plan, you need to have a clear and coherent strategic plan in the first place. A strategic plan is a document that outlines your vision, mission, values, goals, objectives, strategies, and action plans for a specific period of time, usually three to five years. A strategic planning process is a systematic and participatory way of developing and reviewing your strategic plan, involving your internal and external stakeholders, analyzing your strengths, weaknesses, opportunities, and threats (SWOT), and setting your priorities and indicators.

2 Budgeting process

A budget is a financial plan that estimates your income and expenses for a specific period of time, usually one year. A budgeting process is a method of preparing and approving your budget, involving your managers, staff, board, and funders, and based on your strategic plan, historical data, and projections. A budgeting process should be realistic, flexible, and transparent, and should align with your accounting system and reporting requirements.

3 Alignment techniques

In order to align your budget with your strategic plan, you need to use certain techniques that will link your financial resources with your strategic goals and objectives. Zero-based budgeting is one such technique, which requires you to justify every item of your budget from the beginning, instead of relying on previous years or increments. This can help you eliminate unnecessary or inefficient spending and allocate resources to the most important activities. Activity-based budgeting is another technique that focuses on the costs of activities that are necessary to achieve strategic objectives, rather than the costs of departments or units that perform them. This can help you identify the value and impact of each activity and align them with your strategic priorities. Lastly, the balanced scorecard is a tool that helps measure and monitor performance in four key areas: financial, customer, internal process, and learning and growth. These areas reflect your strategic vision and goals, and assist in translating them into operational and financial indicators.

4 Alignment tools

To support your alignment techniques, you need to use some tools that can help you organize, analyze, and communicate your budget and strategic plan. Excel is a software application that allows you to create and manipulate spreadsheets, charts, tables, and formulas. You can use it to prepare and present your budget and strategic plan, as well as to perform various calculations, scenarios, and forecasts. Additionally, budget software can be used to automate and streamline your budgeting process, integrate it with your accounting system, and generate reports and dashboards. Furthermore, strategy software is designed for strategic planning purposes; it facilitates and documents the process of creating and updating your strategic plan, as well as tracking and evaluating progress and performance.

5 Alignment benefits

Aligning your budget with your strategic plan can bring many benefits, such as improved financial performance, enhanced stakeholder satisfaction, and increased organizational learning. By doing so, you can optimize your resource allocation, increase efficiency and effectiveness, demonstrate your value proposition, meet stakeholder expectations, foster a culture of learning and improvement, identify and address gaps and challenges, and adapt to changes and opportunities. All of these factors can help you achieve your financial goals and increase your credibility and accountability.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?