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Are You Planning to Fail by Failing to Plan?

Are You Planning to Fail by Failing to Plan?


It was Benjamin Franklin who said, "If you fail to plan, you are planning to fail.” This quote ran through the minds of many CFOs, Controllers and Financial Planning & Analysis (FP&A) Managers around the end of Q3 and the beginning of Q4 as they began the annual budgeting process. With old spreadsheets dusted off and new assumptions inserted, everyone set forward on planning for FY 2019. Some completed their plans on time, while others are still fixing theirs up.


So often, in so many companies, the budget is a painful process that is treated as a static, immovable and unchangeable document, rarely to be looked at again. In short, the budgeting process is similar to Grandma's dry turkey at Thanksgiving: everyone eats a piece so Grandma doesn't feel bad, but it’s not enjoyable and you're glad you don't have to have it again for another year.


To what end?

With compressing margins, rising rates, increasing origination costs, decreasing volumes, disproportionately high LO comp and a tight housing inventory, it's easy for a budget to become outdated quickly. And if you're going about it like Grandma's turkey, suffering through it once a year, you're doing it wrong. With changes around every corner, you need to be able to run different scenarios and make some budget items contingent on performance goals, similar to bonus criteria. 


Some questions to consider as you start the new year:

  • Is there a reason to look at the budget again?
  • Are we making budgeting and forecasting easy on managers?
  • Are we able to easily see the ROI of a recent investment in a new system somewhere in the loan process or home office?
  • Are Budget vs. Actual comparisons easily available or something we have to ask an analyst for?
  • Are we able to monitor when we're over or under staffed and take action?
  • Are the projections developed in November 2018 relevant for September 2019?


To be fair, the answer to the last question is “no” 99% of the time. But if you answered "no" to many of the first five, you may want to take the budgeting process and adjust staff, systems or mindset.



You need to find a cadence (more frequently than annually) to review and refresh your budget that is right for your company. For some this is once a month, for others it's once a quarter. Go create a Q1 or January forecast, and if the planning levers are easy to pull and push, it shouldn't take long to do a high-level refresh. You'll be able to incorporate knowledge unavailable during the original budget process and help guide your business to meaningful results.


Start small. Incremental changes to the budgeting/forecasting process will make it more meaningful and simple. From there, increase the frequency to better project future outcomes with updated information so you can get ahead of the curve with staffing, production projections, ROI measurement, and more.


About the Authors


Seth Cohen

Seth Cohen joined Richey May in May of 2016 as Director of Business Development for the firm's mortgage banking practice. His primary role includes identifying and establishing new client relationships with companies who would benefit from the firm's mortgage industry specializations and value-added services, including audit and tax services, as well as a wide range of advisory services that help clients mitigate risk and promote long-term success.

Ben Duke

With a background in Accounting, Financial Planning & Analytics and several years of experience with systems implementations, Ben Duke brings a diverse skill set to the world of budgeting, forecasting, and business intelligence. Ben founded Amata Solutions to focus on providing the best data visualization and business performance management platforms for financial services companies, with a focus on mortgage banking. Amata Solutions was recently purchased by Richey May as part of their Technology Solutions practice and will continue to provide clients with sales, best practices, and services in these areas.

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