How are you presenting your budget forecasts? This might sound like a simple question, but communicating your budget forecast well involves more than just sharing the numbers and hoping they’ll do the talking for you.
In reality, the way you present your budget forecast could make just as much difference to how well it is received as the information you include in it.
Whether you’re presenting to internal management, investors, or board members, if you want to make sure everyone in the room really understands and engages with the data, you might need to polish up your presentation skills.
Before we get started let’s clear up a common question:
What’s the difference between a budget, a forecast, and a budget forecast?
- Budget – Budgeting is a detailed planning process that is usually static and lays out plans and expectations in advance (usually for a year). It includes the business’s revenue and expenses but can also include more detailed versions of each.
- Forecast – Forecasting is more dynamic than the budget but they also play into each other as expected revenue keeps the budget in mind. Forecasting usually involves sales and revenue but it can include any metric and can change as often as the business wants or needs.
- Budget forecast- A budget forecast predicts what would happen if the company follows the exact budget without any changes.
Now let’s take a look at some strategies to help you improve your budget forecast presentations.
1) Know Your Audience
Take some time to understand who you’re going to be presenting to and what might be important to them. Stakeholders can vary wildly and, chances are, not everyone in your audience is going to be a finance aficionado. They’ll also all have different priorities and individual needs from the available budget.
With this in mind, you might need to tailor some elements of your presentation to different levels of financial understanding and show them how the numbers are relevant to their own interests.
For example, a board member is likely to be interested in how the budget matches up with the company’s strategic goals or market expansion. On the other hand, a departmental manager could be more concerned with how the budget will affect their own team’s resources, so you need to make sure to give them the detail they need and not lose them in the bigger picture stuff.
To make sure you create a presentation that is relevant and useful to everyone involved, your first step should be getting a good understanding of the individual backgrounds, interests, and concerns of your stakeholders.
To get to know your audience better, consider conducting surveys or having an informal catch-up ahead of your presentation to understand their needs and expectations. You could do this in person or in a virtual meeting space. If you’re unsure how to do this in a virtual space, here’s a quick guide on how to make a conference call on Android.
2) Use Clear and Concise Language
We’ve all had one of those experiences when it feels like someone is talking another language to us. Ever placed a support call to your IT department and found yourself met with a stream of technical jargon and acronyms that leaves you more confused than before?
The thing is, no matter how good our intentions are, communication breakdowns can happen in any field. When we’re familiar with our own area of expertise, it can be all too easy to forget that not everyone understands the sort of terminology that we might use day-to-day.
When you’re preparing your budget forecast presentation, remember that financial data that looks clear as day to you can be complex and intimidating to non-experts. To avoid any confusion or misunderstandings, consider how you can break things down into more easily understood concepts.
For example, don’t assume everyone will know what common acronyms like “EBIT” stand for, and instead use the full explanation. Instead of saying “liquidity ratio,” you might explain it as “the measure of how easily the company can pay off its short-term debts with its current assets.”
You can also use analogies or real-world examples to help simplify more complex or abstract concepts.
3) Visualize Data Effectively
The quickest way to lose your audience’s attention? Having them sit through a lengthy presentation of dull spreadsheets, data, and numbers. As they say, a picture paints a thousand words. So, consider using visual aids to make your presentations both more engaging and understandable.
You can use charts, graphs, and infographics to turn complex data into easy-to-understand visual representations. For example, rather than just listing monthly sales figures in a table, you could create a line graph that shows sales trends over time. Your audience can then easily grasp whether sales are increasing, or declining, without needing to decipher lots of data.
When using visual aids in your presentation, keep in mind the following:
- Choose the right type of chart: Not all charts work for all types of data. Make sure you choose the one that best represents the concept you want to demonstrate. For example, line charts are good for showing trends over time, but they don’t work so well if you want to illustrate portions of the budget. For this, you’d be best using a pie chart or stacked bar chart.
- Keep it simple: Cluttering your visuals with too much information can make them confusing and defeat the object of using them. Focus on the key points you want to get across and use colors and labels sparingly to highlight important data.
- Use consistent formatting: Keep fonts and styles consistent, and use color wisely. Consider using presentation templates to keep formatting consistent.
- Label clearly: Stakeholders should be able to understand the visual without you needing to explain it in detail, so make sure that all axes, data points, and trends are clearly labeled.
4) Highlight Key Metrics and Assumptions
There will be parts of your budget forecast that are more critical than others when it comes to the bigger picture, so make sure to highlight these and support them with your key metrics and assumptions.
For instance, metrics like revenue growth and profit margins are good indicators of the business’s financial health, so these are the sort of details that will likely be on your stakeholder’s radar. Other less critical factors, like smaller expense categories, are still relevant but will require less emphasis.
Start by identifying the areas of your budget forecast that matter most to your stakeholders. This will likely be things like revenue growth, profit margins, cash flow, or return on investment. Outline why these metrics are important and how they contribute to the company’s financial performance.
Then, back this up with the assumptions you have used to build your forecast. This will be any factors that influenced your projections, like market trends, economic conditions, and business strategies like sales prospecting.
Explaining how you reached your conclusions builds transparency into your forecast and gives stakeholders more confidence in your projections rather than just showing them the final numbers.
5) Tell a Story
How do you turn numbers into a compelling story? Say you are providing a presentation of a budget forecast to potential investors. You might open with a headline to set the scene and pique their interest.
It could be a problem that your company faced like a market downturn or unexpected operational costs. In our example, we’re going to use a shift in market dynamics that put the sales team under pressure to perform under tight budget constraints.
Now you’ve got their attention, your story will go on to explain how your team identified solutions, reallocated resources, and implemented new strategies to tackle these challenges. For example, you might introduce an auto dialer for sales to free up your sales team’s time for manually dialing customers and spend it on having meaningful sales conversations.
Flesh out your story by including examples of how your budgeting decisions paid off in results.
In our example, this could look something like this:
- Revenue Increases: Within the first quarter of using the auto-dialer, the sales team increased their call volume by 50%, leading to a 30% increase in closed deals. This translated to a 20% rise in overall revenue compared to the previous quarter.
- Cost Savings: The efficiency gained from the auto-dialer reduced the need for additional temporary staff, saving approximately $50,000 in operational costs over six months.
- Sales Efficiency: The average call duration decreased by 15%, while the conversation-to-conversion ratio improved by 25%, indicating more effective customer interactions.
Finally, back up your narrative with hard facts in the form of key data points and trends, bringing in those visuals like charts and graphs to make the information more impactful.
6) Use Finance Software for Accurate and Real-Time Data
So far we’ve talked about the best ways to communicate your budget forecast, but it’s also critical that the information within your presentation is as accurate as possible. If you want to improve the reliability of your data, Financial Planning and Analysis software should be your go-to tool.
These solutions use real-time data, automated calculations, and dynamic reports that ensure the data you’re giving to your stakeholders provides them with an up-to-date and comprehensive view of the financial health of the business as it stands today.
Another useful function of FP&A software that you might want to use in your presentation is scenario analysis. You can use this feature to show possible outcomes under different assumptions.
This can really come in handy – while we can’t predict the future, we can certainly be better prepared for how events might impact financial performance. For example, you can use this as part of your risk management process to show stakeholders how different business decisions and changing market conditions may affect the forecasts.
Finance software can also save you a lot of legwork pulling together data manually. By automatically collecting and analyzing data for you, it frees up your time to work on building a killer presentation.
7) Provide Context and Comparisons
Looking at your budget forecast in isolation can make it difficult to really understand how the company is performing in the greater scheme of things. You can offer more context by comparing current forecasts with previous years or industry benchmarks. This gives stakeholders a clearer picture of where the company is headed.
For example, if you are forecasting a 10% increase in revenue for the upcoming year, this figure might not mean very much without something to compare it to. By stacking it up against revenue growth in previous years and industry averages, stakeholders can get a better idea of whether the forecast is realistic and ambitious.
Contextualizing data and using comparisons help stakeholders grasp the broader implications of your forecast. Here are some tips on how to put your data in context:
- Run through historical comparisons: Compare the current forecast to historical data. This often shows trends and patterns that help stakeholders understand how the financial performance of the company has evolved over time.
- Benchmarking: Compare your forecast to industry benchmarks. This gives an idea of whether the company, compared to its peers, is doing well and can be used to suggest areas of both good practice and weakness.
- Future Projections: Providing commentary on future projections and their relationship to the strategic goals of the company can highlight any potential risks and opportunities.
8) Encourage Interaction and Questions
Your budget forecast presentation shouldn’t be a one-way conversation. If you don’t engage your audience in your presentation, you run the risk of misunderstandings or losing their interest.
We’ve all experienced the deafening silence when a presenter reaches the “any questions?” slide at the end. If you leave discussions to the end of your presentation, your audience might have forgotten key questions they wanted to ask or feel like their input is no longer valuable.
Make your presentation an interactive environment where you actively encourage stakeholders to ask questions and discuss the forecast as you go along.
This approach keeps people interested throughout the presentation and gives you the opportunity to address any points your audience is unclear on, making sure everyone has a good understanding of the budget forecast.
9) Follow Up with Detailed Reports
Even when your audience is thoroughly engaged in your presentation, it’s unrealistic to expect them to remember all the details you’ve covered.
So, it’s important to follow up promptly with detailed reports. This allows stakeholders to read back through the budget forecast and digest important details in their own time.
Send your reports out immediately after your presentation while it’s still fresh in your stakeholder’s mind. You can distribute hard copies, send them over email, or use fax from computer.
These reports should include all the data, assumptions, and analyses that you covered in the presentation, along with any other supporting information for reference.
Sending detailed reports serves several purposes. Firstly, it’s a useful reference for stakeholders to look back at the information and get deeper into the data for those who want more detail. Secondly, they demonstrate transparency and thoroughness in your financial reporting, which gives stakeholders more confidence in the budget forecast.
10) Continuously Improve Your Approach
Despite your best efforts, there will always be room to improve your presentations. Reach out to stakeholders after your presentation to gauge their feedback on what they thought worked well, and where you could improve. It might be that they’d appreciate more detail in certain areas, or perhaps they’d like you to include clearer visuals to understand complex concepts and scenarios.
You can use this feedback to look for areas where you can make future presentations even better and refine your communication style and strategy when showcasing your work.
Consider creating a feedback form or conducting follow-up interviews to gather insights from your audience. Use this feedback to identify areas for improvement and to experiment with new techniques and tools.
Turning Budget Forecasts into Engaging Presentations
Budget forecasts don’t need to be a tedious ‘tick in the box’ exercise every year when the start of the new financial year rolls around.
They should be engaging, informative, and useful presentations that leave your stakeholders with a good understanding of the financial health of the company and confidence in the numbers you’ve communicated.
By following the tips we’ve given above and spending some time thinking about how to communicate your presentation, your numbers can become the star of the show. So, take the opportunity to craft a compelling narrative, use clear visuals, and provide relevant context that resonates with your audience.
