How do you measure the impact of your budget?

1 Define your budget objectives

Before you can measure the impact of your budget, you need to define what you want to achieve with it. What are the specific, measurable, achievable, relevant, and time-bound (SMART) goals that you have set for your budget? How do they relate to your overall mission, vision, and strategy? How do they support your key performance indicators (KPIs) and metrics? By clarifying your budget objectives, you can establish a clear baseline and direction for your budget analysis.

2 Track your budget variance

One of the most common ways to measure the impact of your budget is to track your budget variance, which is the difference between your planned and actual income and expenses. By comparing your budgeted and actual figures, you can identify where you are over or under budget, and why. You can also use budget variance to assess how well you are managing your resources, controlling your costs, and generating your revenue. You can track your budget variance using spreadsheets, software, or dashboards.

3 Conduct a cost-benefit analysis

Another way to measure the impact of your budget is to conduct a cost-benefit analysis, which is a technique that compares the costs and benefits of a project, program, or policy. By estimating the monetary value of the inputs and outputs of your budget, you can determine the net benefit or return on investment (ROI) of your actions. You can also use cost-benefit analysis to prioritize your budget items, evaluate your alternatives, and justify your decisions. You can conduct a cost-benefit analysis using formulas, tables, or charts.

4 Solicit feedback from stakeholders

A third way to measure the impact of your budget is to solicit feedback from your stakeholders, which are the people or groups who are affected by or have an interest in your budget. By gathering their opinions, perceptions, and suggestions, you can gain valuable insights into how your budget is impacting them and their needs. You can also use feedback to improve your budget communication, collaboration, and alignment. You can solicit feedback from your stakeholders using surveys, interviews, focus groups, or meetings.

5 Review your budget performance

A fourth way to measure the impact of your budget is to review your budget performance, which is the process of evaluating the results and outcomes of your budget. By analyzing your data, reports, and feedback, you can assess how well you have achieved your budget objectives, how efficiently you have used your resources, and how effectively you have delivered value to your stakeholders. You can also use budget performance review to identify your strengths, weaknesses, opportunities, and threats (SWOT), and to plan for future improvements. You can review your budget performance using templates, checklists, or tools.

6 Adjust your budget accordingly

A fifth way to measure the impact of your budget is to adjust your budget accordingly, which is the action of making changes or corrections to your budget based on your findings and feedback. By adjusting your budget, you can align it with your current reality, needs, and goals. You can also use budget adjustment to optimize your resource allocation, cost management, and revenue generation. You can adjust your budget using methods such as rolling forecasts, zero-based budgeting, or flexible budgeting.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?