Although we develop software to mathematically convert ideas into measurable outcomes, we have always viewed Plansmith as an education company. Not education as in ‘a + b = c,’ but in the way relationships and behaviors drive a financial outcome. This year, we are introducing a new educational solution called Budget Playbook. This online tool connects vision with purpose and execution to help you reach your budget targets. At Plansmith, we use Budget Playbook to dive into the relationship between ideation and plan execution to foster communication and drive better results.

We often receive calls from our clients stating that their “margin looks wrong,” and the first thing they expect us to review with them is, of course, the calculation. But the margin not being as expected is only a result, or symptom, of an underlying problem. To understand that measure, we have to peel the onion using the report analytics within Compass. What caused my margin to change?

Next, we’d examine the balance sheet categories, the yields and costs within them, and from there, narrow the question down to the major players affecting the margin. Once the particular account(s) are identified, we’d look at the components that affect their yield or cost. This may be an unexpected maturity/prepayment or early withdrawal. Perhaps a loan or deposit was not executed as planned for last month? When we peel the onion, we find the why behind the resulting change in our financials.

Taking this concept to a corporate level, with your financial budget targets in hand, we ask the question how. How will my financial plan be successful? It can’t sustain itself on hope alone. To help with this question, let’s peel the onion again using Budget Playbook.

First, you’ll need to define objectives. Objectives are goals, above and beyond business as usual, that are identified as necessary to reach your budget targets. Objectives should be kept few and concise. When an objective is completed, it can be replaced by a new one. An objective’s success can be measured in a variety of ways, of which may not necessarily be a dollar value. For example, an objective may be to grow the loans by 5%. Knowing your average loan per customer, you expect to need 25 new loan customers this year. The objective would be 5% Loan Growth with a success measure of 25 new loan customers.

Next layer, what activities are needed to support this objective? These are called action items. Document action items that specifically outline activities by individuals or groups that will ensure the success of the objective. Each action item should also be given a specific timeframe of desired completion. Using the same example, your action items may be to a) plan to hire a new Lending Officer who is expected to bring 10 new clients to your institution by year-end and b) develop an outreach program to increase Commercial RE Development lending.

This brings us to who. Who will be assigned responsibility for an objective and its activities? This is where most people panic, but I assure you accountability is not a 4-letter word. It simply assigns a leader to a project to coordinate the execution of the activity and record its progress.

The last layer of the onion involves results. Results can be both positive and negative. When an activity is behind or looks like it may fail, it presents an opportunity for the group to work together to resolve challenges. Using Budget Playbook’s dashboards for review, you can see how your plan is progressing and evaluate its execution to determine if it will meet your targets. If not, revise! A plan is a living, breathing document – only the targets are set in stone.

Plansmith stresses the importance of these relationship fundamentals as they can often be obscured by the wealth of data within them. Tracking and monitoring complete the journey of your success story, while also helping to point out obstacles that may be encountered along the way. Be consistent, share ideas, use Plansmith tools, and never hesitate to reach out to our team of Planning Advisors for guidance.

Thanks for reading,

Sue West
President