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By Mandy Potts, MBA  Building a budget is an important step that all organizations must do. The budget is the foundation for what the organization is going to do and how they are going to pay it. The best advice I can give you is to start early (3 months out) with the goal to have the budget approved BEFORE the fiscal year starts.
Here are common steps to complete this process: Step 1: Look Back and Look Forward Most financial and budget analysts agree to start with historical data. Take the time to analyze previous years' budgets (I suggest 3 years) and understand the drivers and assumptions behind these budgets. Most of this analysis will be done through variance analysis, which means investigating the difference between the budget and the actual expense. Do some research about the future. Being active is knowing what the legislature is planning to give your organization. Research grantors and see what their funding objectives are for the next year. Research the Consumer Price Index (CPI) and any other major expenses (drivers) that could cause an impact in your new budget. Helpful hints: I suggest reviewing anything where the variance is over or under by 10%.
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