Budget Call vs. Business Planning – Which is Better?

When it comes to annual operational planning and budgeting, you need a process that is both effective and efficient.

You also need a process that fits your organization’s needs and capabilities. One common approach is to conduct a “Budget Call;” another is to implement a “Business Planning process. Here are simple definitions of each:

  • Budget Call – A process through which each department/function in an organization formulates and submits projected resource needs for the coming year.
  • Business Planning – An integrated planning approach utilizing top-down and bottom-up methods to help organizations link aspects of strategy, operations, and budget each year.

Is one approach better than the other? What are the pros and cons of each? In this post we will break both down and help you determine the methods that will best serve you and your organization as you prepare for the coming year?

Benjamin Franklin reminded us about the importance of planning when he said “By Failing to Prepare, You Are Preparing to Fail”

Comparing Budget Calls to Business Planning

In a typical Budget Call approach, a Fiscal Leader or Budget Team Member requests that all Departments in an organization submit projected resource needs for the coming year. This is usually accomplished by providing each Department with prior year expenditures and requesting a projected value for each resource area for the upcoming year.

A primary estimation method in Budget Calls is extrapolation, where Managers use historical expenditure data to predict future behavior by projecting the trend forward. The Finance Team reviews all requests, identifies outliers, compares proposed expenditures to expected revenue, and presents a budget to Leadership. Budget targets are finalized and then tracked throughout the year.

Budget calls are usually treated as a separate track from other forms of strategic planning, tactical planning, or capital planning.

Budget Calls are easier to conduct; Business Planning has transformative potential

In a Business Planning approach, the organization’s Executive Team communicates priorities and high-level financial targets for the coming year.

Each Department formulates a proposed plan addressing how it envisions achieving the broader organizational priorities. Within its plan, the Department assess itself, evaluates its performance, defines potential tactics, and develops resource projections to support continuing operations as well as new initiatives.

The Executive and Finance Teams review the Business Plans comprehensively and evaluate proposals in the context of priorities and projected affordable resources. The Executive Team makes tactical decisions, approving select initiatives and identifying detailed budget targets for each resource area for the coming year. Decisions and budgets are formally communicated to Functions/Departments. Both tactical execution and budget performance are monitored and adjusted throughout the year.

Business Planning directly links together elements of strategic planning, budgeting, operational, and other planning activities.

The following table compares key attributes of each approach:

Attribute Budget Call Business Planning
Complexity Relatively Low – Limited to budget-specific data Relatively High – Links multiple aspects of planning and data sets
Effort to Execute Relatively Low – Requires less data, more simplified methods, less sophisticated decision making Relatively High – Requires more data, more complex plans, and more sophisticated decision making
Engagement Limited to Finance/Budget Team and select Managers Inclusive of Executives, Finance, HR, and all Managers
Accountability Centralized Distributed
Primary Method Extrapolation Objective-Driven
Tools Typically conducted with spreadsheets / collaborative workspaces Requires more sophisticated tools for data presentation, trending, planning, & tracking
Impact Potential Low – Typically produces similar results from year-to-year High – Can potentially transform an organization’s operations and/or financial position within one or two years

 How Do You Choose?

You must understand your organization’s needs, capabilities, and maturity to identify the annual planning approach that will work best. Here are some helpful questions to ask:

  • What are historical / current planning practices?
  • Are well-defined tools and processes in place?
  • What is the organization’s management philosophy (e.g. centralized vs decentralized)?
  • Is the organization’s management approach proactive or reactive?
  • How stable is leadership?
  • Who will own the planning process each year?
  • Do managers and administrators have sufficient business acumen?
  • What is the quality, accuracy, and availability of the organization’s operational and financial data?
  • Does the organization communicate effectively (vertically and horizontally)?


So, when it comes to Budget Call vs. Business Planning, which is better? The answer is: it depends on your organization’s stability, situation, and needs.

  • If your organization is stable, has limited planning resources, and is more centralized in its management approach, a Budget Call is likely your best option.
  • If your organization is complex, has sufficient business acumen, is striving for more distributed management, and is facing difficult strategic and financial decisions, Business Planning is required to attain transformational results.

The Plan4 team is ready to help you implement either approach by offering tools, best practices, training, and other support to make your planning as efficient as possible. Contact Us today to discuss how we can be of service.

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