Budgeting and forecasting — built from the operations, not last year plus ten
A budget that was written in December and never looked at again is a document. A forecast that gets updated when the year turns out differently is a tool. Most businesses have the first and think they have the second.
EverStone CPA is a sole practitioner Chartered Professional Accountant firm working remotely with owner-managed businesses across BC.
Quick answer: A useful budget is built from operating drivers — crews, seats, units, hours — rather than by adding a percentage to last year. It is then compared against actuals every month, and a rolling forecast carries the current best view forward so the number in front of you is never out of date.
On this page
Why last year plus ten per cent fails
Adding a percentage to last year assumes the same business, only bigger. It rarely is: one large project changes the cost shape for a contractor, and two hires give an agency a cost step before revenue follows.
A driver-based budget starts from what generates the numbers: crews, billable hours, units and margin, staff and hiring dates. The financial statements then follow from the operating plan rather than being invented beside it.
The practical benefit is that when the year goes differently, you can see which assumption was wrong. A percentage budget can only tell you that you missed.
The difference between a budget and a forecast
A budget is a commitment. It is set once for the year, it is what performance is measured against, and it does not move. Changing the budget mid-year to match what happened destroys the only benchmark you had. A forecast is a current best guess. It changes every time something material changes, and its job is to tell you what the rest of the year now looks like. Most businesses need a rolling forecast that always looks twelve months ahead, refreshed monthly or quarterly.Holding both at once is the point. The budget tells you how far off plan you are; the forecast tells you where you are actually going to land. Businesses that keep only one of the two are either flying blind or moving the goalposts.
What the work involves
Understanding the drivers. A conversation about how the business actually earns, which is usually the most useful hour of the process and often the first time the owner has had to state it explicitly. Building the model. Revenue by line, direct costs on their own logic, overheads by category, headcount with start dates, capital purchases with their timing, and the tax and payroll consequences that follow. Wiring it to the actuals. A budget that cannot be compared to the ledger without a manual exercise every month will not be compared to the ledger. The chart of accounts and the budget have to be built to match. Reforecasting on a rhythm. Monthly or quarterly, depending on how fast the business moves, with the variances explained rather than just displayed.Where this fits
Budgeting and forecasting is a deliverable within a fractional controller engagement. It needs a reliable close, so it usually comes second — a forecast on untrusted numbers is a spreadsheet with false security.
A forecast is usually built for someone else to read. Financing and lender readiness sets out what a bank actually does with it.
Where the decisions on top of the forecast are the difficult part rather than the forecast itself, that is fractional CFO work, and the two are often scoped together.
Other fractional cfo or controller work
The rest of what this covers, and the page each one is on.
Common questions about budgeting and forecasting
We have never had a budget. Where do we start?+
How often should the forecast be updated?+
Should the budget change when the year goes differently?+
Can this be done for a business with seasonal revenue?+
Starting fees
Every fee is fixed in writing before any work begins.
- Controller or CFO supportcontroller from $1,650, CFO from $2,750 a monthThis page
- Monthly bookkeeping, GST/PST filing includedfrom $325 a month
- Payroll, remittances, T4s and ROEsincluded in monthly bookkeeping
- Books, payroll and the year-end T2 together$500–$700 a month
- Corporate year-end and T2 returnfixed fee, quoted in writing
- Personal tax return (T1)from $125; self-employed or rental $275–$500
- Catch-up bookkeepingfrom $2,200 per year of records
- One-off advice call with a CPA$225 plus GST