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horizon. Forecasting is typically a less-detailed, longer-range projection tool. Under both approaches, you can project what you think your sales and expenses might be using research and estimates. Think of forecasting as an educated guess and budgeting as a near-term goal. Good companies use a system that allows forecasting and budgeting to work together. Below are some examples. Expenses: Setting a budget to guide your current spending looks closely at both fixed and variable expenses. Forecasting estimates what those expenses will be based on different sales and revenue scenarios. When creating a budget, you tie specific spending limits in certain areas to how much income you expect to have. Income: In both budgeting and forecasting, you estimate what your income will be using sales and revenue history as well as anecdotal evidence and guesstimates based on what's happening in your marketplace. Budgeting relies more on recent history, current contracts and income levels. Forecasting takes a longer view of this information. Reforecasting: Savvy finance teams employ a reforecasting process on a regular basis during the fiscal year to stay on top of projected financial results. Reforecasting is a process of using your actual results to date and then reforecasting the balance of the fiscal year to determine expected fullyear results. This process is typically done on a monthly or quarterly basis, and often it's as simple as adding your actual year-to-date results to the remaining budget for the year. A more complex approach is to examine the remaining budgeted projections and fine-tune these forecasted results to more accurately reflect current and anticipated business conditions. The process of reforecasting provides you with more up-to-date and refined numbers to guide planning and allows for earlier course-correction opportunities. 2. INTEGRATE BUSINESS PLANNING AND BUDGETING A business plan is a written description of your future vision and strategies. It outlines the direction of your overall business and each function of the business supporting that overall direction. It details assumptions that are charted out over both the short and the long term, such as economic assumptions, the competition, pricing, new products or facilities, and cost reductions or expansions. The specific tactics developed during the business planning process are usually directly linked to your budgeting and forecasting. In particular, these tactics will drive many of the key assumptions made during the budgeting process. Find your wine at any time. We are social, mobile, and local. w w w. v w m m e d i a.com J a n - Feb 2014 | V INE YA RD & W INE RY M A NAG EM EN T 133