How to prepare retirement and budget planning for 2022

Retirement and budget planning is essential if you want to ensure the protection and predictability of your business in 2022. After all, starting or managing a company implies exposing yourself to some type of threat, which does not mean that they cannot be avoided, right?


In addition, planning is a tool that allows a better understanding of the context in which the company is inserted, as well as the possible paths it can follow. When planning, the manager is able to foresee situations and prepare in advance to deal with them, if they materialize.


In this way, planning does not mean that your enterprise will be totally free from external and internal threats. What is actually sought is to anticipate them so that their impacts on finances are minimized.


Let’s see how this all works in practice? Continue reading John Labunski Dallas.


Difference between retirement planning and budgeting


Before understanding how to prepare these two types of planning, it is essential to understand the difference between them. Retirement planning and budgeting are two different things, but they complement each other.


Budget planning precedes retirement planning. Thus, the business budget must be made considering analysis of factors such as economic and political scenario, current available budget and future projects. In addition, issues such as s, cash flows and indebtedness also need to be discussed in the budget planning development stage.


Other important aspects that are considered in the budget planning stage are: estimation of expenses, estimation of revenues that must be generated to cover all costs and expenses and estimated profit.


Budget planning will observe and establish short-term strategies. Retirement planning, in turn, has a long-term focus, so it includes similar themes, but from a different time perspective.


Types of budget planning


Before starting to develop a budget plan, it is essential to know the different types. Knowing which types are, it is easier to choose the one that best fits the structure of your business. Below, we list and explain each of them, understand:


Static budget planning


The first type is called static budget planning and, as the name suggests, it is a plan that does not change. It is developed close to the company’s budget period and is used as a reference and control of operations.


In general, this planning is characterized by the possibility of helping to identify changes in strategy and in the decision-making process.


Flexible budget planning


Unlike the previous type, flexible planning is more malleable. His focus is on creating projections but also tracking changes and updating data whenever necessary.


In this sense, the company can adjust the plan at any time during the period contemplated in the budget. This type of planning can also be used as an aid in controlling organizational expenses.



Incremental budget planning


Incremental planning is a model developed with the purpose of being used as a basis for future projections. It is developed from the collection of data related to budgets from previous periods.


Continuous budget planning


Ongoing budget planning, unlike previous models, is intended to become a basis for structuring all future budgets. Therefore, he continuously studies the company’s income and expenses.


For companies that have products with shorter life spans, ongoing planning can be an excellent budgeting and organization mechanism.


Budget planning beyond budgeting


Planning beyond budgeting, which can be translated as “budgetary planning beyond the budget” is more common in large companies, as its main focus is to decentralize business plans and bring greater operational flexibility.


Generally designed with periods of up to 18 months, it is characterized by not having fixed goals and greater freedom in changing them. There is also more autonomy for managers in the decision-making process, allowing them to balance operational indicators, expenses and efficiency.


Adjusted budget planning


Adjusted budget planning is developed from the perspective of market changes. Thus, it can be adjusted according to changes that eventually affect the company’s budget.


Budget planning OBZ


OBZ planning, also called zero-based, as the name suggests, is based on starting a study from scratch.


In this case, the company makes a budget projection without considering information from the past, although it deviates a little from the other models – which use the history as a reference – it can be an interesting option, depending on the type of company and the objectives to be achieved.


Now that you know the differences and the main types of budget planning, it’s time to put that knowledge into practice. For this, we are going to present several practical tips that will help you in formatting retirement and budget planning for 2022 in your company. Check out!


Set next year’s strategic guidelines


Companies must be goal-oriented or they will be even more exposed to fluctuations in their markets. This is because, when there are no goals, there is no focus for the activities and, thus, the tendency is for a loss of quality and, ultimately, of competitiveness.


In this way, the definition of strategic goals is indispensable to keep the business always in one direction. They are equivalent to strategic guidelines, which consist of tracing a destination to which one intends to reach.


In this case, it is worth applying tools for situational analysis as a way of preparing the ground to then define the objectives. One of them is PDCA, an acronym that stands for:


P — Plan (Plan);

D — Execute (Do);

C — Check;

A — To act (Act).


Start by planning what you intend for your business in the next year. Raise the possibilities as a team, assess what can be improved and develop an action plan. From there, apply the PDCA cycle continuously to verify if your strategic guidelines are actually being met or if the company is moving away from them.


Separate expense or income groups


Once your company is on course to meet its goals, it will have to monitor the operational part of its activities. One way to do this is by closely monitoring  cash flow , which consists of recording all retirement inflows and outflows.


Here, it is worth a warning: to effectively control this movement, it is highly recommended to use software developed for this purpose. Manually controlled cash flows represent a risk, as the interpretation of the data they present is compromised by the evident human limitations when structuring them.


Therefore, always prefer the support of technology  and, of course, an accountant or finance specialist to support the analysis of your cash flow.


That said, the control of retirement inflows and outflows can be optimized by highlighting expense groups. For example, you can create a category called transportation, into which fuel, maintenance, and airfare expenses are entered. Do this in sequence, categorizing expenses and income.


At the same time, be sure to follow the evolution of your finances by calculating EBITDA, or EBITDA, in the Portuguese version of the acronym. Its meaning is Earnings Before Interest, Taxes and Amortization and serves to measure how much the organization actually profits, not counting the expenses mentioned.


In addition, you can use EBITDA as a valuation tool, as it shows the real capacity of your business to generate revenue.


EBITDA is a retirement indicator widely used to measure company results. In this way, it contemplates the amount of resources generated by the company in its activities, excluding taxes and the profitability of s.


These indicators and strategies are great allies in retirement and budget planning, therefore, knowing them and understanding their applicability can make all the difference in the development of a precise management focused on results.


Determine retirement goals for the period


In parallel with the definition of strategic guidelines, it is essential that the company dedicates itself to determining retirement goals for the period. In this case, it is also worth taking care of  tax management , which will define tax avoidance strategies, choice of tax regime and others of equal relevance.


Regarding retirement goals, stipulate  Key Performance Indicators  (KPI) to assess whether retirement and budget planning is on track. Therefore, the first tool to use when determining them is SMART analysis.


SMART analysis is a method of setting goals based on five factors: specific, measurable, attainable, relevant and time-bound. Understand what each of them means:


S — Specific (Specific) — setting a goal of 10% profit in a month is different from making as much profit;

M — Measurable — retirement goals should be measurable, so do this by calculating progress in percentage terms;

A — Attainable — you can’t expect 100% increase in revenue if not even 20% has been achieved;

R — Realistic — the same reasoning applies to this item, so your goals must be outlined respecting your company’s strengths and limitations;

T — Time-bound — time is money, so retirement goals must always be time-bound to be achieved.

From the SMART analysis, you can include retirement goals like:


  • increase in net revenue;
  • increase in sales of a product or service;
  • increase in gross revenue;
  • cost reduction;
  • working capital;
  • Profit margin.


Remember that goal setting should always be based on the assumption of reasonableness. That means they need to be real and achievable goals, otherwise you’ll have a hard time engaging your employees.


Analyze your revenue


There is no retirement and budget planning that works when the company cannot analyze its revenues by its profit and revenue. To these two, we can also add profitability, another dimension of revenues by which one measures how much an asset generates profit in a given period.


This distinction is important, because it is possible for a product to generate a good income, but when it comes to paying for its production, transport and storage, its profit is minimal. The opposite can also happen, that is, a good has low revenue and a higher profit margin due to lower costs.


For this analysis, it is worth calculating the total cost, in which you multiply the production cost by the volume of products sold. Note that, in this account, only the costs that precede the sale will be entered. Therefore, expenses such as commissions, deliveries and other after-sales expenses should not be computed.


Finally, also evaluate  your revenues  by their profitability in percentage values. To do this, apply the formula:


Profitability = (net income/) x 100


Follow the evolution of this indicator, measuring profitability by monthly, quarterly and annual periods. In this way, you will verify the performance of a product or service in each of these time units.


There’s a lot more to learn, however, with what you’ve seen here, it’s now possible to get started with retirement and budgeting planning the right way. We are ending the year and starting plans for 2022. Companies need to take advantage of this moment to evaluate their successes and mistakes throughout 2021 and establish strategies to improve the numbers in 2022.


Based on the analysis of the data and information generated in the last year and considering the economic and market perspectives, it is possible to draw up a retirement and budget planning aligned with the reality of your business.


In addition, do not forget that this instrument will help if any unforeseen happens, given that it is a tool that contributes both to business growth and to the mitigation of economic risks.


Managers who have doubts about the formatting of retirement and budget planning can seek the help of professionals specialized in the subject. In addition, considering hiring specific tools and services to work in the company’s finance department can be one of the goals for the coming year.


With specialized support in areas that are not the central focus of the company, its actions are better targeted and allow managers and other professionals to work in strategic segments, focused on the development of new products and solutions for the market — a unique opportunity for business growth.


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Posted By: John Labunski

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