Most organizations with several years of business history use the “classic” budget process. They simply review the previous year’s budget and tweak it for any changes in the coming year. Known changes in expenses are updated, and any revenue changes such as increased prices or multi-year grants are updated. Some organizations use a five-year plan to project revenue growth, and just plug in those numbers for the coming year.
However, the classic budget process ignores current events. Did the economy tank this year and your sales nosedive? Did your major software system update last year greatly increase the efficiency of your staff’s paperwork processes?
All these issues are missed when just tweaking the previous year’s numbers.