The following is a guest post from Tom Voiland, CFO, Strategist, and Business Leader.

Strategic Planning and The Conceptual: A Review

Last month, we introduced the formal process of Strategic Planning and the importance of its completion before the next fiscal year’s budgeting begins. We discussed The Conceptual, a series of meetings in which the company’s leadership meets and discusses high-level objectives and relevant financial numbers for the coming year.

The Conceptual as a Planning Tool

Now that the larger picture has been established via The Conceptual, each organizational leader is responsible for utilizing the Conceptual document to drive his or her department’s planning and budgeting. For example, Sales and Marketing can use it to create its sales plan, ad spend, commission structures, recruiting budget, and projected headcount. IT can use the Conceptual to plan its capex spend, software licensing needs, projected headcount, and cost-savings initiatives.

The Role of the SubConceptual

Based on the size of the organization, each department head can have his or her own strategic planning process—a SubConceptual, if you will. However, the outcome of that process should be completely consistent with the company’s overall goals and objectives (outlined in the Conceptual). The entire strategic planning process must be “calendarized,” with specific meetings, dates and times set out in advance. The process must not adversely affect the responsibility of management to execute day-to-day business.

The final step in the strategic planning process is for executive management to reconvene with each department leader presenting his or her area’s high-level goals and objectives—the SubConceptuals. Department leaders want to make a case for the resources they need in order to accomplish their stated objectives. Upon completion of the departmental pitch, executive management can ordain the department’s strategic plan. Once all the department leaders have presented their SubConceptuals and executive management has signed off, a Strategic Plan for the upcoming fiscal year has been established.

Waste no time, that is only the first part of this process.

Not to be Forgotten: Budget Time

Now begins work on the budget. Whether the business is large with several departments or small with a few executive managers, the completed strategic plan(s) must serve as the foundation for creating the numbers. Similar to the strategic planning process, the budgeting process should follow a set calendar, with each department head presenting his or her numbers to executive management. There will surely be a bit of back-and-forth for revisions and adjustments, but in the end, the budgets will need to be approved by all department heads and executives.

What you’ve created is a roadmap—the same roadmap for all in the organization to reach the company’s overall goals and objectives in the coming year. If there is a material change in the business, the budgets will need to be adjusted. However, the original budget is always maintained as a working-model.

In Summary

There are a variety of benefits derived from budgeting. It formalizes the coordination of activities between all these departments while aligning these activities to the large(r) picture: the company’s strategic plan. With a plan in place, everyone is moving toward the same goal, and this encourages all areas within the business to operate more efficiently.

What we’ve established is a criticality for strategy and budgeting. Financial empowerment is key to aligning the budget with the company strategy. The financial health of your organization can go a long way to contributing to the development of the company strategy and become a driving force in how its implemented, which ultimately results in growth. Now while a plan is easier said than done, you’re creating the infrastructure to a sound organization that will serve you in the long run.