Annual business planning should begin in October, not January. By then, companies have sufficient financial data, time to implement decisions such as recruitment, financing and repricing, and the opportunity to discuss the year ahead with suppliers, banks and major customers. Waiting until January can mean losing a significant part of the year before decisions take effect.
The article by Antonis Avgerinos, External CFO, proposes a practical budgeting process built around four meetings. The first reviews actual performance, including sales by customer, product and channel, gross margin and rising expenses. The second focuses on realistic, bottom- up assumptions, linking sales to customer numbers, order frequency and average order value, while also accounting for cost pressures such as energy, raw materials and payroll. The third translates these assumptions into monthly profit, cash-flow and working- capital projections, supported by base, adverse and favourable scenarios. The fourth establishes a one-page monthly monitoring report covering sales, margins, cash position, collections and inventory.
The article also highlights four common mistakes: focusing only on sales, preparing the budget without the team, failing to review it regularly, and refusing to revise it when market conditions change. Ultimately, planning does not provide certainty. It gives businesses something more valuable: the time and information needed to respond.